* Oil prices fall as OPEC and Russia consider output boost
* Wall St slips as oil slump drags down energy stocks
* Italy, Spain fears boost demand for U.S. bonds
* World shares steady but set for weekly loss (Updates with opening of U.S. markets; changes dateline, previous LONDON)
By Laila Kearney
NEW YORK, May 25 (Reuters) - The prospect of higher oil output slammed crude prices on Friday, lifting the U.S. dollar and weighing on energy shares, while political upheaval in Europe and uncertainty over a U.S.-North Korea summit restrained equity markets and boosted bond prices.
Crude oil prices declined more than 3 percent after Saudi Arabia and Russia said they were ready to ease supply curbs that have pushed prices to their highest since 2014. gave a measured response to Trump's decision to cancel the meeting, with Vice Foreign Minister Kim Kye Gwan expressing hope for a "Trump formula" to resolve the standoff over its nuclear program. remarks prompted Trump on Friday to dangle the possibility that the June 12 summit with North Korea's leader Kim Jong Un might still happen. very much want to do it. We'd like to do it," Trump said.
Wall Street opened lower as slumping oil prices dragged on energy stocks ahead of a holiday weekend in the United States, which typically leads to low volume.
The Dow Jones Industrial Average .DJI fell 30.9 points, or 0.12 percent, to 24,780.86, the S&P 500 .SPX lost 4.67 points, or 0.17 percent, to 2,723.09 and the Nasdaq Composite .IXIC added 16.94 points, or 0.23 percent, to 7,441.37. of Exxon (NYSE:XOM) XOM.N and Chevron (NYSE:CVX) CVX.N each fell more than 2 percent, while service firms Schlumberger SLB.N , Halliburton (NYSE:HAL) HAL.N and producers Occidental Petroleum (NYSE:OXY) OXY.N and ConocoPhillips (NYSE:COP) COP.N were down between 3 percent and 4.2 percent.
U.S. Treasury yields fell to their lowest level in three weeks as concerns about Italy's new government and a leadership changed in Spain boosted appetite for low-risk investments. Prime Minister-designate Giuseppe Conte began assembling his cabinet on Thursday, with party leaders pushing for an 81-year eurosceptic economist to be given the pivotal post of economy minister. Italy's president, meanwhile, is opposing the appointee. risk also reared its head in Spain, where a threat of no-confidence motions against Prime Minister Mariano Rajoy sent Spanish stocks and bond prices plunging. pan-European FTSEurofirst 300 index .FTEU3 rose 0.04 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.23 percent.
While yields on German and U.S. bonds fell amid the uncertainty, there have been few signs of a wide-ranging sell-off in higher-risk assets - Wall Street's volatility index .VIX stayed near four-month lows.
"Market reaction to heightened political risk remains reasonably muted," Indosuez Wealth Management global head of economic research Marie Owens Thomsen said.
She cited the example of Turkey and Italy, where a stock and bond sell-off has not spilled much into other emerging economies or euro zone states.
However, worry about Italy kept the euro under pressure against the dollar.
The dollar index .DXY rose 0.48 percent, with the euro EUR= down 0.54 percent to $1.1656.
The dollar has rebounded after touching two-week lows versus a basket of currencies .DXY on Thursday, helped by gains against commodity-linked currencies, as oil prices fell. Japanese yen weakened 0.11 percent versus the greenback at 109.41 per dollar, 1.3313reversing gains seen after the summit cancellation JPY=D3 . down 0.49 percent
Elsewhere, worries that investors could shift assets from emerging markets to higher-yielding U.S. bonds have been a major headwind for emerging markets this year. Turkey has been the worst hit. GRAPHIC-Global assets in 2018
http://tmsnrt.rs/2jvdmXl GRAPHIC-Emerging markets in 2018
http://tmsnrt.rs/2ihRugV GRAPHIC-World FX rates in 2018
http://tmsnrt.rs/2egbfVh GRAPHIC-MSCI All Country World Index Market Cap
http://tmsnrt.rs/2EmTD6j
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