By Jon Sindreu and Akane Otani 
   -- Italian government bonds and Spanish stocks sell off 
 
   -- Treasury yields edge down further below the 3% mark 
 
   -- Oil prices slide on production fears 

U.S. stocks stalled Friday as tumbling oil prices and worries over political risks ranging from North Korea to Italy kept investors on guard ahead of the holiday-lengthened weekend.

Stock indexes around the world struggled to gain ground this week as geopolitical rifts drove investors into relatively safe assets, such as government bonds and gold.

President Donald Trump called off a much-awaited summit with North Korean leader Kim Jong Un, while investors contended with the rise of antiestablishment parties in Italy and a corruption scandal in Spain.

The moves drummed up fresh uncertainty among investors, who find themselves grappling with an increasing array of global political risks. Still, many investors remain convinced that the rekindled tensions are driven by a new aggressive negotiating style favored by upstart politicians -- including Mr. Trump -- and that they are unlikely to cause disruption in the longer term.

"What I have been seeing for the past six months is that there are a lot more opportunities than there was last year. There's just more stuff happening," said Christian Ryther, manager of Curreen Capital Management, who has been adding risk to his portfolio.

The Dow Jones Industrial Average fell 73 points, or 0.3%, to 24739. The S&P 500 lost 0.3% and the Nasdaq Composite edged up 0.1%.

Trading was quiet Friday, with some traders attributing the lull to a dearth of activity ahead of the long weekend. The U.S. stock market is closed Monday in observance of the Memorial Day holiday.

Despite some wobbles, all three indexes remained on course for weekly gains, supported by advances in shares of utilities and real-estate companies, which are bondlike stocks that tend to do well in times of market volatility.

The gains helped offset steep losses in the S&P 500 energy sector, which fell Friday and headed toward a sharp weekly loss as U.S. crude oil prices tumbled.

U.S. crude for July delivery fell 4.9% to $67.88 a barrel after major oil producers including Saudi Arabia and Russia signaled they might be willing to relax global production caps. The selling weighed on the energy sector, with shares of Hess falling 5.7% and Newfield Exploration shedding 5%.

Elsewhere, the Stoxx Europe 600 posted a 0.9% weekly decline, snapping an eight-week winning streak, as investors weighed signs of political risk being reawakened in the eurozone.

Antiestablishment parties are heading a new Italian government, while Spain is submerged in a corruption scandal that could lead to new elections.

The developments led investors to dump Italian government bonds, sending the yield on the 10-year bond to its highest level since 2014.

"We are avoiding Italian risk because there's a contagion fee there," said Angus Sippe, a fund manager at Schroders, an asset manager with about $600 billion under management. "In the [eurozone] periphery, you clearly see political risk."

Spanish stocks came under pressure, too, with the benchmark IBEX 35 index losing 1.7% after the country's main-opposition Socialist Party filed a no-confidence motion against Prime Minister Mariano Rajoy.

A court ruled Thursday that Mr. Rajoy's party had benefited financially from an illegal kickback scheme. The group has said it would appeal the ruling.

Meanwhile, U.S. government bonds rallied as bubbling geopolitical tensions and signs that the Federal Reserve would be willing to remain on a gradual pace of interest-rate increases helped drive up demand for Treasurys.

The yield on the benchmark 10-year Treasury note settled at 2.931%, compared with 3.067% the prior Friday. That was its biggest one-week decline since April 2017. Yields fall as bond prices rise.

Write to Jon Sindreu at jon.sindreu@wsj.com and Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

May 25, 2018 15:54 ET (19:54 GMT)

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