* French election graphic http://tmsnrt.rs/2jLwO20
* European shares fail to hold gains, energy sector weighs
* Oil prices claw back some losses
* Squaring of bearish bets sees euro, French banks rally
* Global reflation trade still under pressure
By Vikram Subhedar
LONDON, April 20 (Reuters) - World stocks eked out small gains in choppy trading on Thursday as investors resisted risky bets ahead of the first round of the French presidential election over the weekend.
Oil prices, which fell sharply on Wednesday on supply news, regained some of their losses.
In general, markets cautiously stuck to well-worn trading ranges buffeted by concern over political risks and continued tensions over North Korea.
Stock futures on Wall Street ESc1 SPc1 rose 0.3 percent.
MSCI's world stock index .MIWO00000PUS was up 0.1 percent.
The FTSE 100 .FTSE , which has slid into negative territory for the year, fell 0.2 percent.
"Given the binary risk of the French presidential elections and geopolitical concerns over North Korea, investors are staying on the sidelines," said Fan Cheuk Wan, head of investment strategy and advisory, Asia, at HSBC Private Banking.
Centrist Emmanuel Macron held on to his lead as favourite to emerge as the eventual victor in the French presidential election, a closely watched poll showed, although it indicated that the outcome of the first round of voting on Sunday was too close to call. of French voters remain undecided, making this the least predictable vote in France in decades, and raising fears of a potential surprise result that could spread turmoil in markets.
SQUARING UP
The lack of conviction among market participants spurred some traders to shut down broad bets against the euro EUR= and other proxies for election risks such as shares of French banks.
The euro EUR= rose 0.4 percent to $1.0751 while France's blue-chip CAC 40 .FCHI rose as much as 1 percent, led by gains in BNP Paribas BNPP.PA and Societe Generale SOGN.PA .
"Squaring up may be a factor," said BMO strategist Stephen Gallo, noting that markets were still broadly short the euro and cutting back on risk would mean to take those positions off too.
Others warned against reading too much into Thursday's moves.
"Market behaviour is starting to look worryingly similar to the run-up to the Brexit and Trump votes where investors started to overweight marginal shifts/info in polls, creating a self-reinforcing belief that things are OK," Deutsche Bank (DE:DBKGn) strategist George Saravelos wrote in a brief note to clients.
Choppy trading in the run-up to the French elections comes as a run of disappointing U.S. economic data and questions about whether the Trump administration can push through tax cuts have dented some of the enthusiasm for risky assets in recent weeks.
A sharp dip to three-week lows in oil prices overnight was the latest sign of an unwind in the global reflation trade. Crude oil clawed back some of the loss but concerns about a supply glut capped the rebound.
"Rising U.S. oil inventory data is now starting to impact the market's aggressive long position in crude," said analysts at Morgan Stanley (NYSE:MS) in a note to clients.
Brent crude futures LCOc1 were up 0.5 percent to $53.22 a barrel after sliding more than 3 percent in the previous session. U.S. West Texas Intermediate crude futures CLc1 were up 0.4 percent.
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