* Italy lifts Europe after Asia drops for 8th straight day
* Dour mood after losses in U.S. and Europe on Friday
* U.S.-China trade tensions a major worry for investors
* U.S. Fed widely expected to raise rates later this month
* Sweden's crown rises on election results
* Industrial metals weak on China trade worries
LONDON, Sept 10 (Reuters) - Gains in Europe helped steady global stock markets on Monday, after rising anxiety about the U.S.-China trade war and further Fed rate hikes gave Asia its longest losing streak since the end of 2015.
A 2 percent jump in Italian shares on soothing budget comments had boosted Europe and Wall Steet was set to start higher, but it felt fragile after a fresh sell-off in China overnight dragged Asia to a new 14-month low.
Traders were bracing for a potential escalation in the Sino-U.S. row after U.S. President Donald Trump raised the stakes on Friday.
He said he was ready to impose tariffs on virtually all Chinese imports into the United States, threatening duties on another $267 billion of goods in addition to the $200 billion already facing levies. He called on Apple to make its products in the United States.
Strong U.S. jobs numbers on Friday had bolstered bets on a higher dollar, with expectations the Federal Reserve will keep raising U.S. interest rates.
"It's more of the same, markets continue to be under pressure from a whole host of headwinds," said fund manager GAM's Investment Director of emerging market equities, Tim Love.
He pointed to the latest fall in China's currency, the yuan, which is now down almost 9 percent versus the dollar since April. "You are back to the highly politically charged question - is this currency manipulation or not?"
Europe's resistance to the gloom was led by the jump in Milan after Economy Minister Giovanni Tria said over the weekend that the country's upcoming budget would help push down the government's bond market borrowing costs.
RELIEF IN SWEDEN
Stockholm and the Swedish crown strengthened after the nationalist Sweden Democrats gained less ground than polls had predicted in elections on Sunday .
The crown rose about 0.6 percent to 10.43 against the euro, while the neighbouring Norwegian crown surged after higher August inflation data cemented expectations that interest rates will go up there next week.
The euro made 0.2 percent against the dollar at $1.1575 after falling more than half a percent on Friday following the U.S. jobs data.
Figures on Friday showed traders' overall dollar positions making their biggest drop in nearly six months. The pullback comes after speculators had boosted net long bets on the greenback to the highest for more than 1-1/2 years, in late August.
"There is an awareness that it is a very crowded trade," said Karl Schamotta, director of global markets strategy at Cambridge Global Payments.
"There are some major uncertainties about just how far U.S. growth outperformance and monetary divergence will go," he said.
The most eyecatching action was in Asia again.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.9 percent to the lowest since July 2017, extending losses from last week when it dropped 3.5 percent for its worst weekly showing since mid-March.
Beijing had warned of retaliation if Washington launched any new trade measures. But it is running out of room to match them dollar-for-dollar, raising concern it will resort to other measures, such as weakening the yuan or taking action against U.S. companies in China.
Chinese shares were battered, with the blue-chip index off 1.4 percent. Shanghai's SSE Composite fell 1.2 percent and Hong Kong's Hang Seng index shed 1.3 percent.
Japan's Nikkei ended 0.3 percent higher after revised second-quarter data showed the world's third-biggest economy grew at its fastest pace since 2016 .
Trump, who is challenging China, Mexico, Canada and the European Union on trade issues, has also expressed displeasure about the large U.S. trade deficit with Japan.
EMERGING MARKET RISKS
The latest 14-month low for emerging-market shares came amid turbulence in Argentina, Turkey, Brazil, Russia and South Africa, where currencies have been routed recently.
Some Asian economies are vulnerable, too, Nomura analysts said, with many countries burdened by high private debt. They also noted a "concentration risk" from some of the world's largest funds' heavy investments in emerging-market assets.
The Indian rupee hit a record low of 72.50 per dollar and Indonesia's rupiah - Asia's second-worst performer this year - weakened 0.4 percent, near an all-time low .
"Given the latest comments from Trump, investors are likely to see the potential for further depreciation in EM currencies with the trade war cranking up yet another notch," said Nick Twidale, Sydney-based analyst at Rakuten Securities Australia.
There were other areas of fallout from the global trade worries too. The Australian dollar, a proxy for Chinese growth because of the large volume of metals Australia sells to China, hovered near its lowest in 2-1/2 years and was last at $0.7115.
Copper, which China hoovers up ferociously, tumbled 1.2 percent, after seeing a 20 percent drop already this year.
Gold was lower at $1,193.01 but oil prices bucked the trend, climbing after three straight days of losses as data showed U.S. drilling stalling and with U.S. sanctions against Iran's crude exports looming in November.
U.S. crude futures were up 44 cents at $68.20 per barrel and Brent crude futures added 52 cents to $77.35 a barrel.
(Additional reporting by Swati Pandey in Sydney; editing by Larry King and Andrew Roche)