* 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 slightly lower before UK election
(Adds oil recovery and settled price; updates throughout)
By Hilary Russ
NEW YORK, June 6 U.S. Treasury yields and the
dollar dropped to seven-month lows on Tuesday and world stocks
slid as political uncertainty from the United States to Britain
and the Middle East pushed investors away from risky assets.
The yen and gold also gained amid prevailing caution as an
Arab rift opened up around Qatar, 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."
Wall Street was lower for a second day after both European
and Asian stocks dropped during their sessions.
Retail stocks also pulled shares lower, with Macy's Inc
losing ground after a warning on profit margins, and
Wal-Mart Stores Inc down after rival Amazon.com Inc
said it would offer a discount on its popular Prime
subscription service to shoppers who receive U.S. government
The Dow Jones Industrial Average fell 8.22 points, or
0.04 percent, to 21,175.82, the S&P 500 lost 0.61 points,
or 0.03 percent, to 2,435.49 and the Nasdaq Composite
added 6.28 points, or 0.1 percent, to 6,301.96.
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 diplomatic spat in the Middle East initially dented oil
prices, which slid below $47 a barrel on Tuesday before
recovering on technical support.
U.S. crude oil futures settled up 79 cents, or 1.67
percent, at $48.19 per barrel. Brent was last up 1.17
percent on the day, or 58 cents, at $50.05.
The pan-European FTSEurofirst 300 index lost 0.62
percent and MSCI's gauge of stocks across the globe
shed 0.14 percent.
Investors piled into gold, U.S. Treasuries and German
government bonds - some of the safest assets in the world -
thrusting German 10-year borrowing costs to
U.S. Treasury yields dropped to a seven-month low of 2.129
percent at one stage and gold briefly touched
a high of $1,295.97, prices not seen since November.
Lower bond yields come despite the Federal Reserve widely
expected to raise U.S. interest rates a quarter point next week,
but also follows a run of weaker-than-expected U.S. data.
Sterling was 0.12 percent lower ahead of Thursday's
general election. British Prime Minister Theresa May looks on
course to increase her parliamentary majority, an opinion poll
showed on Tuesday, shortly after another survey suggested the
race with the opposition Labour Party was neck and neck.
The dollar, meanwhile, was 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.
The dip came ahead of Comey's expected testimony on
Reports suggest the former FBI chief plans to talk about
conversations in which U.S. President 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.
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 and Jessica Resnick-Ault in New York)