I use a 1996 850 T5, tows fine if a little thirsty! The V70 classic and the 850 are almost the same car so it will be ok up to about the max quoted limit of 1600kg. Your volvo handbook will have all the figures you need at the back or the dealer will be able to tell you over the phone. For the 850 towing specs have a look here:
Ben, I also use an 850 T5. Tows like the wind, just a touch thirsty. Is yours auto? If so, have you fitted an extra cooler? Up to now I haven't, but I have just upgraded the van to a new one which weighs in at 1366kg. Off to Italy again this year, so tempted to fit one. Any comments?