* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Italy weighs on global stocks; Nikkei off 0.5 pct
* Oil near four-year highs, gold firm
* Trade pact clause seen deterring China deal with Canada, Mexico
By Swati Pandey
SYDNEY, Oct 3 (Reuters) - Asian shares reversed early losses while the euro rebounded from six-week lows on reports Italy will cut its budget deficit at a faster pace than expected, raising hopes Rome could stave off a problematic debt blow-out.
Italy will reduce its budget deficit to 2 percent of gross domestic product (GDP) by 2020 from the earlier announced 2.4 percent, local newspaper Corriere Della Sera reported, a pledge that boosted the euro.
The single currency has been rattled by concerns that a significant increase in the Italian budget will deepen the country's debt and deficit problems, and by extension those of the European Union.
The euro EUR=D3 jumped 0.3 percent on the news to $1.1585, snapping five straight days of losses that had pushed it to a six-week trough of $1.1506.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS climbed 0.2 percent with Hong Kong's Hang Seng index .HSI up 0.5 percent and Singapore shares .STI adding 0.9 percent.
Japan's Nikkei .N225 pared early losses and was last a shade weaker while Australian shares .AXJO gained 0.3 percent. E-Minis for the S&P 500 ESc1 the Dow 1YMc1 also reversed losses gain 0.2 percent each.
China's financial markets are closed for the National Day holiday and will resume trade on Oct. 8. South Korea was also closed for a public holiday.
"The big market mover in the last 24 hours has been Italy and the concerns around its debt so the latest news is being considered a much better outcome than was priced into the market," said Kyle Roda, Melbourne-based analyst at IG.
"The news has prompted some buying, we're seeing a bit of a relief rally."
Globally, risk appetite was hit after European Union officials expressed concerns about Italy's budget plan, which would widen the deficit significantly. WAR CONTINUES
Generally, sentiment was still jittery though even as a new U.S.-Mexico-Canada trade agreement appeared to ease global trade tensions. A controversial clause in the trilateral pact put the focus back on the Sino-U.S. tariff dispute. markets have taken a hammering this year as investors fretted the trade dispute could put a significant dent on growth.
"Many deadlines have come and gone and the trade war continues," said Ethan Harris, global economist, BankofAmerica-Merrill Lynch.
"However, in this case we have marked our calendar for November 30," the date when the U.S. President Donald Trump and his Mexican and Canadian counterparts are likely to sign the new trilateral trade pact.
"It is also the day Trump and Chinese President Xi Jinping are attending the G-20 meetings. (We) continue to believe that is the first plausible date for serious negotiations."
The dollar's index, which measures the greenback against a basket of major currencies .DXY , was last at 95.314, pulling back from six-week highs of 95.744 set on Tuesday.
Gold traded near its highest level in more than a week as investors sought refuge in the safe haven after equity markets weakened. Spot gold XAU= was last at 1,207.19 after adding 1.3 percent to $1,208.23 an ounce overnight. prices held close to four-year highs on supply worries due to Washington's sanctions on Iran.
Brent LCOc1 added 5 cents to $84.85 per barrel, not far from a four-year high of $85.45 touched earlier in the week. U.S. crude futures CLc1 inched 1 cent up to $75.24 a barrel, after earlier touching a four-year high of $75.91. O/R
Some analysts say fears about the supply of oil may be overdone.
"Even assuming that Iranian output will fall by as much as it did during the far more comprehensive sanctions imposed between 2011 and 2014...we think that likely increases elsewhere will be enough to make up the difference," Capital Economics said in a note.
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