UPDATE 5-Oil rises over $110 on U.S. budget moves
* US Senate edges closer to budget deal, needs House OK
* Tensions over Iran's nuclear programme ease after talks
* No EIA data due to shutdown, API report later on Weds
LONDON, Oct 16 (Reuters) - Brent crude oil rose above $110 on Wednesday as the U.S. Senate inched towards a last-minute deal to raise the government's borrowing authority.
A Senate deal to raise the debt ceiling and reopen shuttered government agencies is "very close," a senior Senate Democratic aide said. Any proposal would also have to pass the Republican-controlled House of Representatives, which has failed to produce its own plan.
The U.S. government shutdown and fiscal deadlock have clouded the outlook for demand in the world's largest oil consumer and roiled financial markets.
Brent crude was up 67 cents to $110.63 a barrel by 1355 GMT after ending $1.14 lower in the previous session. The U.S. benchmark gained 65 cents to $101.86, after settling down $1.20 on Tuesday.
U.S. stock market indexes were up by around 1 percent, and the dollar held its ground.
"The market view is that the impasse in Washington will be resolved," said Gareth Lewis-Davies, senior energy strategist at BNP Paribas in London.
"But until there is a breakthrough, the uncertainty will persist," he said.
If Congress fails to extend the government's debt ceiling by a Thursday deadline, the U.S. Treasury may miss Social Security payments and a host of other obligations.
Analysts say that if the United States then defaults on its government obligations, the U.S. financial sector could freeze up, endangering the global economy.
Fitch Ratings has warned it could cut the sovereign credit rating of the United States from AAA, citing political brinkmanship over the debt ceiling.
A second day of talks between six world powers and Iran over Tehran's nuclear programme offered fresh hope of an end to a decade-long standoff, which could increase supply.
Western diplomats in Geneva said Iran had indicated a readiness to scale back its most sensitive nuclear activity but were cautious over whether the Islamic state was willing to go far enough to nail down a deal.
"With the much more benign environment in the Middle East and ongoing shutdown in the United States, we're seeing a bit of ebb and flow," said Michael Hewson, an analyst at CMC Markets.
Iran will hold another round of nuclear negotiations with the so-called P5+1 group in Geneva in a few weeks' time, Iran's foreign minister said.
Years of sanctions have cut Iranian oil exports by more than 1 million barrels per day (bpd), and any hint of a relaxation of the sanctions regime would push down prices.
The U.S. Energy Information Administration will not release its weekly oil inventory data from this week due to the government shutdown, but industry group the American Petroleum Institute will publish its report at 2030 GMT on Wednesday.