* China crude imports up in January, imports from Iran drop
* Italian election exit polls point to hung parliament
* New talks on Iran's nuclear program to start on Tuesday (Updates with inventory information, adds quote)
By Gabriel Debenedetti and David Sheppard
NEW YORK, Feb 25 (Reuters) - Brent crude rose on Monday after Chinese data showed strong demand in the world's second-largest oil consumer, but prices came off session highs as uncertainty surrounding Italian election results weighed on the euro and spooked markets.
Chinese oil imports rose more than 7 percent in January from a year earlier, customs data showed, while its imports from sanction-hit Iran dropped by about a third, spurring fears of a tighter market.
Oil gave back some gains as financial markets slipped after exit polls from Italy's national election fed fears of political stalemate in the euro zone's third largest economy.
"It seems like we've had an emotional turnaround. We started off on the bullish foot this morning with China and we also had optimism that the Italian election would have a happy outcome, but it doesn't look like we have a happy outcome. It looks like we have a confusing outcome," said Phil Flynn, an analyst at Price Futures Group in Chicago.
"If you look at the reversal in the oil, it reflects the reversal in the Euro and the Yen. And that kind of concern is rising, the stock market now is selling off pretty hard."
Brent crude rose as much as 1.5 percent in early trade to a high of $115.87 a barrel, but the future contract for April delivery settled just 34 cents higher at $114.44 a barrel.
U.S. crude settled down 2 cents a barrel at $93.11, well off an earlier high of $94.46.
Oil turned lower in after hours trading as financial markets absorbed the implications of no clear winner emerging in the Italian election. The euro posted a near 2 percent swing against the dollar, moving from 1 percent up in early trading to almost 1 percent down by 4:15 p.m. EST (20 15 GMT). Th e S&P 500 suffered its worst one-day percentage loss since Nov. 7, 2012.
A stronger dollar tends to weigh on commodities priced in the U.S. currency, making them less attractive to investors.
Robust demand growth from China contributed to a near $10 rally in Brent prices at the start of the year, but prices slipped 3 percent last week after oil industry sources said Saudi Arabia was preparing to increase second quarter output.
In Italy, market hopes for a pro-reform center-left victory - seen as crucial to helping the euro zone debt crisis - appeared dashed as exit polls showed former Prime Minister Silvio Berlusconi's center-right bloc leading the race for the Senate.
Oil traders were also waiting for Tuesday talks in Kazakhstan between Iran and global powers over Tehran's disputed nuclear program.
Six countries - the United States, Russia, China, Germany, Britain and France - are set to offer Iran some relief from international sanctions if it agrees to curb production of higher-grade enriched uranium, a U.S. official said on Monday.
Investors are also awaiting Tuesday's 10 a.m. EST (1500 GMT) testimony from U.S. Federal Reserve Chairman Ben Bernanke for clues on whether, and at what levels, the Fed will maintain its bond-buying stimulus program.
Financial markets were rattled last week after minutes of the Fed's January meeting suggested some Fed officials were mulling scaling back its strong monetary stimulus earlier than expected.
Prices were also pressured by forecasts for the sixth consecutive rise in U.S. crude oil stocks last week. A Reuters poll ahead of Tuesday's American Petroleum Institute numbers and Wednesday's U.S. Energy Information Administration data showed that crude stocks are expected to rise 2.3 million barrels in the week ending February 22. Distillate stocks were expected to dip 1 million barrels, and gasoline stocks were expected to drop 400,000 barrels. (Additional reporting by Robert Gibbons in New York, Ron Bousso in London, and Manash Goswami in Singapore; editing by Keiron Henderson, Anthony Barker, Bob Burgdorfer, Leslie Gevirtz and David Gregorio)