May 26, 2017 / 8:51 AM / 3 months ago

Oil prices rebound; dollar firms as sterling drops

FILE PHOTO: An oil pump jack pumps oil in a field near Calgary, Alberta, Canada on July 21, 2014.Todd Korol/File Photo

NEW YORK (Reuters) - Oil prices recovered on Friday from some of the previous day's steep slide after investor disappointment that OPEC curbs did not go far enough, while Wall Street stocks eked out a seventh straight day of gains.

U.S. bond yields stayed steady and gold saw big gains as a risk-off sentiment and concerns about political uncertainty took hold, with spot gold XAU= rising to its highest since May 1.

"We have had the political noise coming from Trump and the U.S. administration and there is a certain element of uncertainty in the markets in general, which is supporting gold. Equities are also down," analyst Carsten Menke at Julius Baer in Zurich said.

Spot gold XAU= added 0.9 percent to $1,267.00 an ounce. U.S. gold futures GCcv1 gained 0.82 percent to $1,266.70 an ounce.

Friday's partial rebound for oil prices followed a day of downward pressure. Some market participants had priced in more aggressive, extended output cuts from the Organization of the Petroleum Exporting Countries.

U.S. crude CLcv1 rose 1.82 percent to $49.79 per barrel and Brent LCOcv1 was last at $52.15, up 1.34 percent on the day. Both contracts, however, ended the week lower.

Sterling slid more than 1 percent following a poll showing the ruling Conservatives' lead shrinking two weeks before an election.

Britain's pound GBP= tumbled to a more than four-week low of $1.2772. It was last down 1.03 percent at $1.2806.

The U.S. dollar, however, rose after upbeat data showed that 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.

"The GDP figure was a pleasant surprise. I don’t think markets were looking for a revision this big," said Sireen Harajli, FX strategist at Mizuho in New York.

FILE PHOTO: A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London, Britain, October 1, 2008.Toby Melville/File Photo

"It confirms or at least gives some relief to the idea that the weakness that we had seen in economic performance is likely to be transitory."

The dollar index .DXY rose 0.2 percent, with the euro EUR= down 0.33 percent to $1.1172.

Wall Street saw another strong day for consumer stocks, offset by weakness in healthcare and real estate shares. The flattening market had threatened to break a winning streak, but the S&P 500 eked out a slightly higher day ahead of a long weekend.

The Dow Jones Industrial Average .DJI fell 2.67 points, or 0.01 percent, to end the week at 21,080.28, the S&P 500 .SPX gained 0.75 point, or 0.03 percent, to 2,415.82 and the Nasdaq Composite .IXIC added 4.94 points, or 0.08 percent, to 6,210.19.

Traders work in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, May 10, 2017.Staff/Remote

In Britain, the first opinion poll since a suicide bombing killed 22 people indicated the 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 for Britain to leave the European Union.

The sterling selloff was seen boding well for British exporters, however. British stock markets .FTSE.FTMC bucked the downward trend and hit record highs.

The pan-European FTSEurofirst 300 index .FTEU3 lost 0.22 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.08 percent.

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.

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 Chuck Mikolajczak, Richard Leong, Saqib Iqbal Ahmed and Julia Simon in New York; Editing by Nick Zieminski and James Dalgleish

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