Oil prices see-sawed yesterday 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.

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.

Asian shares also fell, while US stock futures slipped.

British stock markets, however, bucked the trend and hit record highs, with a sell-off in sterling seen boding well for exporters.

Britain’s pound tumbled 0.8 per cent to a three-week low of $1.2834 and hit its lowest level in two months against Europe’s single currency.

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 the exception of London’s FTSE, most major European bourses were down more than 0.5 per cent.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan, which closed at a two-year high on Thursday, fell 0.2 per cent, shrinking its weekly gain to 1.45 per cent. Japan’s Nikkei closed 0.6 per cent lower.

Oil prices initially recovered some ground after tumbling five per cent on Thursday, before falling back.

On Thursday in Vienna, the Organisation 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.

Brent crude futures were at $50.84 per barrel, reversing earlier gains to trade 1.2 per cent lower on the day. They were on track to end with a weekly loss of just over five per cent.

US West Texas Intermediate (WTI) crude futures were below $50, at $48.29, down 1.2 per cent 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 US President Donald Trump over trade and climate change.

The G7 summit comes after Mr Trump criticised military spending by the United States’ NATO allies and condemned German trade policies a day earlier.

“If the G7 meeting breaks out in a row, which is possible, then that’s not going to set us for a good Monday when UK markets are closed and liquidity is dampened,” said Steve Barrow, head of G10 strategy at Standard Bank in London.

“So if I was an investor here I would not want to dip a toe into risk assets in case we get something out of the G7 that could be a bit unsavoury.”

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