LONDON (Reuters) - European shares inched toward four-month highs on Tuesday, as an easing of pressure on Italy’s debt markets coincided with China’s latest move to open up its giant economy to the rest of the world.

Market prices are reflected in a glass window at the Tokyo Stock Exchange (TSE) in Tokyo, Japan, February 6, 2018. REUTERS/Toru Hanai

A pause in the dollar’s recent rally also meant respite for some battered emerging markets -- though still not Turkey -- while signs of better U.S. and China trade relations had Wall Street futures pointing higher. [.N][EMRG/FRX]

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. [GVD/EUR]

“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 VOWG_p.DE, 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.[.EU]

Shares of Ford, General Motors and electric car maker Tesla were up between 0.8 percent and 2.4 percent in pre-U.S. market trading. [.N]

In Asia overnight, Japan’s Nikkei had ended 0.2 percent lower and Australian shares fell 0.7 percent. Chinese stocks also finished in the red, with the blue-chip CSI300 off 0.4 percent. [.SS]

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. The U.S. central bank will publish minutes of its May 2 meeting, when it held rates steady, later this week.

CURRENCIES AND OIL

Emerging market stocks snapped a three-day losing streak and many of the more beaten-down currencies, such as the South African rand, Mexican peso and Indian rupee, pulled out of their recent dives as the dollar eased back. [EMRG/FRX]

Turkey’s lira had initially clawed higher too, only to fall sharply again, to a fresh record low, after another warning about the country’s credit rating. It has now plunged over 18 percent since the start of the year.

“The market is clearly screaming out for a massive rate hike, but it’s not getting it, and the (rising) oil price is killing them too,” said Standard Life Aberdeen’s Kevin Daly.

“We are short the lira and short Turkish bonds so we are certainly not being tempted at this point.”

The dollar index, which measures the U.S. currency against the other 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. [/FRX]

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 31 cents to $72.55 per barrel and Brent rose 52 cents to $79.73. [O/R]

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.