* Crude oil edges lower in fifth day of falls
* World shares look to avoid eighth fall in 10 sessions
* Dollar nudges higher amid talk of Fed rate hike
* Aussie dollar tumbles on rate cut talk
* Euro zone meets on latest Greek aid deal
By Marc Jones
LONDON, May 24 (Reuters) - Oil prices fell for a fifth consecutive day on Tuesday and financial markets were volatile as investors wait to see whether U.S. interest rates will be raised next month.
Asian shares stumbled to near 2-1/2-month lows overnight though Europe was in better form as confirmation that Germany's economy had a solid start to the year added to hopes that talks in Brussels will secure an unusually swift aid deal for Greece. .EU
Britain's FTSE 100 .FTSE , Germany's DAX .GDAXI and France's CAC .FCHI climbed 0.8 to 1 percent as even markets like Russia .IRTS shrugged off the dip in commodity prices to carve out gains.
In currency markets, the dollar continued to feed off revived U.S. rate hike bets although it was the Aussie dollar that caught the eye as speculation about more rate cuts there triggered its heftiest fall in 4-1/2 years. FRX/ Zealand's dollar, which tends to follow the Aussie's movements, also fell 0.7 percent to a two-month low of $0.6706 NZD=D4 , while oil exporter Canada's dollar hit a seven-week low CAD=D4 to underscore the ongoing market uncertainty.
"Everyone is worried about a June hike from the Fed so we are in a bit of a directionless market at the moment," said Allianz (DE:ALVG) Global Investors' Shahzad Hasan.
"I think what is more important is the language if they do hike. Do they continue or do they stop after June, and what is the trajectory for the Fed funds rate in 2017."
Europe's government bond markets saw a broad fall in yields. Greek yields GR10YT=TWEB hovered at six-month lows on hopes that euro zone finance ministers may be able to agree a new aid plan for Athens without any last minute panics.
Greek lawmakers on Sunday approved tax increases and a new privatisation fund to pave the way for a deal, leaving the onus on the rest of the bloc as the International Monetary Fund reiterated its demands for full-blooded debt relief.
"Providing an up-front, unconditional component to debt relief is critical to provide a strong and credible signal to markets," a report from the Fund's staff said. COMMODITIES
Stocks in China .SSEC and Japan .N225 lost 0.7 percent apiece, leading Asian markets down, though some investors were wary of chasing markets lower after their recent retreat.
Yang Hai, analyst at Kaiyuan Securities, said trading is likely to remain dull for a while amid economic sluggishness.
"The current economic environment doesn't justify a sustainable rebound. In addition, regulators are reducing leverage in the asset management industry so money is not flowing in."
Oil prices fell for a fifth day in thin trade as the dollar's strength and talk of Iran upping production kept them under downwards pressure.
The strong dollar also took its toll on gold ZAU= , which dipped to a 3-1/2 week low and industrial metal copper CMCU3 , which neared a three-month low.
The U.S. currency clawed back some of Monday's 1 percent losses against the yen and was last up 0.3 percent at 109.50 yen JPY= and at $1.11 to the euro. EUR=
Philadelphia Fed President Patrick Harker said on Monday a rate hike in June would be appropriate unless data weakens, while St. Louis Fed President James Bullard said holding rates too low for too long could cause financial instability. Chair Janet Yellen will appear at a panel at Harvard University on Friday, a day on which investors will also see the second estimate of U.S. first-quarter growth.
"We are seeing more dollar strength and a lot of it against the smaller currencies," said Saxo Bank FX strategist John Hardy. "The Chinese authorities are keeping the yuan exchange rate quiet, too, which is giving the Fed the room to wax lyrical and be as hawkish as they are being."