* U.S. stocks edge up on Amazon, Microsoft lift
* Dollar hits highest since Jan. 11
* Sterling hits lowest since March 1 as Britain's economy slows (Updates with close of European markets)
By Chuck Mikolajczak
NEW YORK, April 27 (Reuters) - A gauge of world stocks advanced on Friday, buoyed by gains in Amazon, as Treasury yields dipped for a second straight day on strong data on U.S. economic growth, but investors shrugged off news of progress on a peace agreement on the Korean peninsula.
U.S. stocks were little changed, as gains in Amazon , up 4.24 percent, and Microsoft, up 1.05 percent, after their quarterly earnings were offset by a 0.96 percent drop in the energy sector.
Energy was pulled lower by a 3.56 percent drop in Exxon Mobil Corp after the world's largest publicly traded oil producer posted lower-than-expected quarterly results.
U.S. stocks had rallied on Thursday, with each of the major Wall Street indexes climbing more than 1 percent and tech shares posting strong gains. Still, the S&P 500 was on track for a modest weekly decline.
"The lack of follow-through is pretty telling, ... (showing) that volatility is not over," said Tim Ghriskey, Chief Investment Strategist at Inverness Counsel in New York.
"It’s been a great earnings season but the larger issues are out there; the big elephant in the room is the Fed, especially if we see some inflation numbers next week."
The Federal Reserve is scheduled to hold a two-day meeting next week, with an announcement on U.S. monetary policy expected on May 2. Traders currently see only a 6.9 percent chance of a 0.25 percentage point interest rate hike, according to Thomson Reuters data.
The Dow Jones Industrial Average fell 6.43 points, or 0.03 percent, to 24,315.91, the S&P 500 gained 3.12 points, or 0.12 percent, to 2,670.06 and the Nasdaq Composite dropped 1.85 points, or 0.03 percent, to 7,116.83.
European shares closed Friday's session with a slight advance, lifted by results from Spanish banks and a bounce in technology shares to secure their fifth straight weekly climb.
The pan-European FTSEurofirst 300 index rose 0.24 percent and MSCI's gauge of stocks across the globe gained 0.25 percent.
Yields on benchmark 10-year U.S. Treasury debt fell for a second straight day after hitting a four-year high this week.
Ten-year notes last rose 8/32 in price to yield 2.9624 percent, from 2.99 percent late on Thursday.
But the margin between U.S. shorter-dated Treasury yields and longer-dated ones shrank as a smaller-than-expected decline in U.S. economic growth in the first quarter renewed bets the Fed, the U.S. central bank, would stick to its rate-hike campaign to keep inflation in check.
Growth in the U.S. economy slowed in the first quarter to a 2.3 percent annual rate as consumer spending grew at its weakest pace in nearly five years, but the setback is likely temporary.
The dollar held steady after the data, putting it on track for its strongest week since November 2016. The solid week has lifted the currency to its highest since Jan. 11.
The dollar index rose 0.13 percent, with the euro up 0.02 percent to $1.2104.
Sterling slumped to its lowest since March 1 against the dollar. Data showed Britain's economy slowed much more sharply than expected in the first quarter of 2018, slashing market expectations of a Bank of England rate hike in May.
Sterling was last trading at $1.3773, down 1.01 percent on the day.
The South Korean won strengthened after the leaders of North and South Korea embraced on Friday and pledged to work for the "complete denuclearisation of the Korean peninsula." Last year North Korea launched intercontinental ballistic missiles on July 4 and 28 and Nov. 29.
"There’s a long way to go and we’ve seen it coming for a while so it’s not that much new news there," said Ghriskey.
The won strengthened 0.92 percent versus the greenback at 1,068.69 per dollar.
Reporting by Chuck Mikolajczak Editing by James Dalgleish