* Oil rises after sharp falls
* U.S., European stocks down, tracking Asia
* Sterling hit as PM Theresa May's pre-election poll lead shrinks
* G7 leaders to hold two days of talks in Sicily
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh (Changes dateline to New York, adds Wall Street open, updates throughout)
By Hilary Russ
NEW YORK, May 26 (Reuters) - Oil prices see-sawed on Friday after OPEC extended cuts in oil production but disappointed investors by not going further, while sterling slid after a poll showed the ruling Conservatives' lead shrinking two weeks before an election.
World shares bounced around, with Wall Street turning slightly negative after six straight days of gains as another strong day for consumer stocks offset weakness in financial and technology companies.
The Dow Jones Industrial Average fell 15.42 points, or 0.07 percent, to 21,067.53, the S&P 500 lost 0.59 points, or 0.02 percent, to 2,414.48 and the Nasdaq Composite added 0.19 points, or 0 percent, to 6,205.45.
European stocks fell as turbulence in oil markets, and the prospect of tough talks at a meeting of G7 leaders met in Italy, undermined risk appetite.
Britain's pound tumbled to a more than four-week low of $1.2772. It was last down 1.18 percent at $1.2785.
The first opinion poll since a suicide bombing killed 22 people indicated Britain's opposition Labour Party had cut the Conservative Party's lead to five points, with less than a fortnight to go to the parliamentary election.
Prime Minister Theresa May has said a big win would strengthen her hand in Brexit negotiations.
"With this kind of momentum and almost two weeks to go until the vote, not only is this not going to be the breeze that May anticipated when she called the snap election last month, it could yet turn into a humiliating defeat for the Conservative leader and her party," said Craig Erlam, senior market analyst at OANDA.
The sterling selloff was seen boding well for British exporters, however. British stock markets bucked the downward trend and hit record highs.
Shares in Asia dropped. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.08 percent lower, while Japan's Nikkei lost 0.64 percent.
MSCI's gauge of stocks across the globe shed 0.16 percent.
On Thursday in Vienna, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers agreed to extend a cut in oil production by nine months until March 2018 as they grapple with a supply glut. But that disappointed investors betting on longer or larger curbs.
After opening sharply lower, U.S. crude rose 0.67 percent to $49.22 per barrel and Brent was last up 0.43 percent at $51.68 on the day.
Meanwhile, analysts said there was caution in the markets ahead of a meeting of leaders from the world's richest economies that was expected to expose deep divisions with U.S. President Donald Trump over trade and climate change.
The G7 summit comes after Trump criticized NATO allies' military spending and condemned German trade policies a day earlier.
The dollar index rose 0.22 percent, with the euro down 0.3 percent to $1.1175. The U.S. economy slowed less than initially thought in the first quarter as gross domestic product increased at a 1.2 percent annual rate.
Spot gold hit its highest level in nearly four weeks, boosted by the risk-off sentiment because of political uncertainty.
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 Dhara Ranasinghe in London, Tanya Agrawal in Bengaluru; Editing by Nick Zieminski