* European shares hit four month, Italy bond sell-off relents
* Dollar eases off five-month highs, EM FX rebounds
* Oil hovers just under 2014 highs
By Marc Jones
LONDON, May 22 (Reuters) - European shares inched to a near four-month high on Tuesday, as an easing of pressure on Italian markets coincided with China's latest move to open up its giant economy to the rest of the world.
A pause in the dollar's recent rally also meant some respite for emerging markets, tempting some investors back into hard-hit assets of countries like Turkey and South Africa.
Early European trading saw Italian government bond yields come off 14-month highs, after six days of heavy selling on concerns over high-spending policies mooted by a potential new ruling coalition.
The proposed tie-up of the anti-establishment 5-Star Movement and the far-right League has pushed Rome's 10-year yields up nearly 70 basis points since the start of the month. And plenty of questions remain.
"Who will be the next finance minister in Italy, that is the question in the market at the moment," said Rabobank's head of macro strategy Elwin de Groot.
One of the names in the frame is Paolo Savona, an 81-year-old economist and former industry minister. "He is seen as quite a eurosceptic," de Groot added. "It would be quite tough for the market to digest."
Italy's main bourse also outperformed as the news flow eased.
Europe's big carmakers Volkswagen, BMW and Daimler jumped 1 to 1.6 percent too, after China said it would cut import duty on passenger cars and car parts from July 1.
In Asia overnight, Japan's Nikkei had ended 0.2 percent lower and Australian shares fell 0.7 percent. Chinese stocks finished in the red too, with the blue-chip CSI300 off 0.4 percent.
Analysts said investors in the region were worried about the growth outlook, with the U.S. Federal Reserve's plans to increase its interest rates pushing up global borrowing costs.
"Stocks have rallied several times on the belief that trade tensions were easing, only to fall back down as investors took the opposite view," said James McGlew, executive director of stockbroking at Perth-based Argonaut.
A total of three hikes is almost fully priced-in by the market for 2018 although some investors expect the Fed to be more aggressive.
Emerging market stocks snapped a three-day losing streak and many of the more beaten-down currencies, such as the Turkish lira and South African rand, pulled out of their recent dives as the dollar pulled back.
The dollar index, which measures the U.S. currency against the main world currencies, was last down 0.3 percent at 93.40 from Monday's five-month top of 94.058 as the euro clawed back above $1.18 too.
Elsewhere, oil prices bobbed just under highs last seen in 2014 after Venezuela's weekend presidential election heightened persistent worries about falls in global oil output.
The market is bracing for the possibility of additional U.S. sanctions on the country following President Nicolas Maduro's re-election.
U.S. crude added 26 cents to $72.50 per barrel and Brent rose 19 cents to $79.40.
The combination of higher oil and conciliatory actions on the U.S.-China trade front boosted the Australian dollar , a liquid proxy for risk, to a one-month peak.
As the dollar edged back, gold prices eased off December lows to get to $1,294 an ounce.
Reporting by Marc Jones Editing by Catherine Evans