A shock British election result that left no single party with a clear claim to power hit sterling on Friday and left the dollar on course for its best day in over a month, while world shares headed toward their first weekly fall since April.

Axar.az reports citing Reuters.

The outcome of the snap poll, called by Prime Minister Theresa May to try to bolster her parliamentary majority, was a blow to investors who had already weathered major risk events in the United States and Europe the previous day.

But the reaction as it unfolded suggested a more limited impact than after last year's Brexit vote, which triggered a prolonged decline in the pound and unsettled other assets.

After a sharp initial fall, the pound GBP=EURGBP= steadied early in European trading and then began to claw back ground. Safe-haven gold XAU= and U.S. Treasuries drifted lower and futures markets pointed to Wall Street opening modestly higher. [.N]

"The uncertainty is bad news for sterling," said Bank of America, Merrill Lynch European equity & cross-asset strategist James Barty. "I think for the global market it doesn't matter. Unlike Brexit, which at the time had a spillover into other markets, this is a very UK-specific thing."

Bets that another drop in sterling would flatter international firms' profits pushed London's FTSE .FTSE as much as 1 percent higher but it was up a more limited 0.4 percent by mid-session.

Bourses in Frankfurt .GDAXI, Paris .FCHI and Milan .FTMIB had also slipped back to leave MSCI's closely-followed 46-country 'All World' index down 0.1 percent and set for its first weekly fall since mid-April.

May's Conservatives failed to win an outright majority in parliament. It meant she turned to Northern Ireland's small Democratic Unionist Party to retain power, amid serious questions about her own future.

That raised fears the political turmoil could delay and confound talks on leaving the European Union, which are due to start in less than two weeks.

The pound shed more than 2 percent against the dollar, dropping as low as $1.2636 GBP= and 88.6 pence per euro EURGBP= -- two- and six-month troughs -- before recovering all the way to $1.2741 and 87.70. Yields on 10-year gilts GB10YT=TWEB also ticked higher after falling to 1 percent.

John Wraith, a strategist at UBS, said there was a high likelihood of a potentially prolonged period of uncertainty over whether May would be replaced. But he cautioned bears against chasing the pound much lower.

"Today's result will in part be seen as a vote against a definitive break from the EU, and the market may soon begin to reassess the probability of a so-called 'hard Brexit'."