Brent crude rose on Monday after official Chinese data showed strong demand in the world's second-largest oil consumer, but early gains shrank 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.

Financial markets slipped, however, after exit polls from Italy's national election indicated the country could be heading for political stalemate, sparking fears of instability in the euro zone's third largest economy.

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.

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. (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 and Leslie Gevirtz)