* Oil prices recover on technical support
* Gold, German bunds at recent highs as safe assets thrive
* European shares hit, U.S. stocks down partly on retail
* Sterling mostly flat before UK election (Adds Wall Street close; updates throughout)
By Hilary Russ
NEW YORK, June 6 (Reuters) - Oil prices edged up on Tuesday, bouncing after sliding below $47 a barrel on pressure from a Mideast diplomatic rift, while U.S. Treasury yields and the dollar dropped to recent lows and world stocks dropped as political uncertainty pushed investors away from risky assets.
The yen and gold gained as caution prevailed and ahead of testimony from the former head of the FBI, a British election and the European Central Bank's next move, which all happen on Thursday.
"We have risk events piling up," said Blake Gwinn, U.S. rates strategist at NatWest Markets in Stamford, Connecticut. "We'll be very focused on what happens on Thursday, but it might end up being a dud."
Leading Arab powers including Saudi Arabia, Egypt and the United Arab Emirates cut ties with Qatar on Monday, accusing it of supporting Islamist militants and Iran.
U.S. crude rose 1.35 percent to $48.04 per barrel and Brent was last at $49.94, up 0.95 percent on the day.
Wall Street closed lower for a second day after both European and Asian stocks dropped during their sessions.
The largest weight on the S&P 500 was Amazon, down 0.8 percent. Walmart fell 1.7 percent to $78.93 after Amazon said it would offer its Prime subscription service at a discount to U.S. customers on government aid, taking aim at a piece of Walmart's customer base.
The Dow Jones Industrial Average fell 47.81 points, or 0.23 percent, to 21,136.23, the S&P 500 lost 6.77 points, or 0.28 percent, to 2,429.33 and the Nasdaq Composite dropped 20.63 points, or 0.33 percent, to 6,275.06.
On what BayernLB analysts called "Super Thursday", British voters will also go to polls in an increasingly unpredictable general election, the European Central Bank is due to meet and former FBI director James Comey will testify before Congress.
"Once these events pass, we may have a little more clarity and therefore see a little less caution in the markets," said Craig Erlam, a market analyst for OANDA securities.
The pan-European FTSEurofirst 300 index lost 0.62 percent and MSCI's gauge of stocks across the globe shed 0.28 percent.
Investors piled into gold, U.S. Treasuries and German government bonds, among the world's safest assets. German 10-year borrowing costs dropped to six-week lows.
U.S. 10-year Treasury yields, last at 2.145 percent, dropped as low as 2.129 percent, a seven-month low. Gold briefly touched a high of $1,295.97, prices not seen since November.
A run of weaker-than-expected U.S. data dragged bond yields lower even though the Federal Reserve is widely expected to raise U.S. interest rates a quarter point next week.
Sterling turned flat ahead of Thursday's general election. British Prime Minister Theresa May looks on course to increase her parliamentary majority, a poll showed, shortly after another survey suggested the race with the Labour Party was neck and neck.
The dollar fell to a more than six-week low against the yen and was at its weakest since the November U.S. election against a basket of other world currencies.
On Thursday, reports suggest former FBI chief Comey plans to talk about conversations in which U.S. President Donald Trump allegedly pressured him to drop his investigation into former national security adviser Mike Flynn, who was fired for failing to disclose conversations with Russian officials.
The Mexican peso posted a second day of gains after U.S. and Mexican governments reached a new preliminary agreement to shift their sugar trade mix.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
Additional reporting by Abhinav Ramnarayan in London, Richa Naidu in Chicago, Anya George Tharakan in Bengaluru and Richard Leong, Saqib Iqbal Ahmed, Rodrigo Campos and Jessica Resnick-Ault in New York; Editing by David Gregorio