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GLOBAL MARKETS-Stocks stumble, oil creeps up as markets ponder fallout of Mideast tension

Mideast tension@

* Asia ex-Japan stocks, Nikkei follow Wall Street lower

* Oil recovers after falling on escalating Middle East tensions

* Australian dollar holds gains ahead of RBA meeting

* Sterling, euro rangebound ahead of UK election, ECB meeting

* Dollar subdued after disappointing services sector data

SINGAPORE, June 6 (Reuters) - Asian stocks retreated on Tuesday after Wall Street's stumble overnight, while oil inched up from the previous day losses as lower Libyan oil production assuaged concerns that the severing of ties with Qatar by other Arab states could impede a deal to cut crude output.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 percent in early trade, pulling back from a two-year high hit on Monday.

Japan's Nikkei dropped 0.4 percent.

South Korean markets were closed for a holiday.

Australian shares tumbled 0.9 percent, while the Australian dollar slipped 0.1 percent to $0.7481, but retained most of Monday's 0.6 percent gain ahead of a Reserve Bank of Australia policy decision later on Tuesday where the benchmark rate is expected to be kept at a record low 1.5 percent.

Overnight, the major Wall Street indexes slipped between 0.1 percent and 0.2 percent, with Apple Inc. leading losses on the Dow Jones Industrial Average.

Saudi Arabia, the United Arab Emirates, Egypt and Bahrain closed transport links with Qatar on Monday, accusing it of supporting extremism and undermining regional stability. Although oil prices initially rose on fears about possible supply disruptions, they ended the day lower.

Saudi Arabia is the world's biggest oil exporter, and Qatar is the top liquefied natural gas and condensate shipper.

"While we would not want to read too much into this in terms of looming trouble for OPEC, the fact that Qatar's stance towards Iran is a key element in this issue does make for a potentially more complicated setup at future meetings should the issue not have been resolved in due time," JBC Energy analysts said in a note.

U.S. crude added 0.2 percent to $47.50 a barrel early on Tuesday, after falling 0.55 percent on Monday.

Global benchmark Brent rose about 0.25 percent to $49.60.

Sterling, the euro and the dollar were all hugging tight ranges before the European Central Bank meeting and the UK's national election on Thursday.

British Prime Minister Theresa May's lead over the opposition Labour Party ahead of Thursday's national election has narrowed to just 1 percentage point, according to a poll by Survation for ITV television on Monday, conducted before the attacks in London on Saturday.

Opinion polls by other leading polling firms have given wider leads for the Conservatives in recent days, ranging as high as 11 and 12 points.

Sterling was marginally higher at $1.291 on Tuesday.

"Even if May does just about enough to increase the majority - that could still potentially be sterling positive," said ING currency strategist Viraj Patel.

ECB policymakers are set to take a more benign view of the economy when they meet on Thursday and will even discuss dropping some of their pledges to ramp up stimulus if needed, four sources with direct knowledge of the discussions told Reuters last week.

But the expectations for a less dovish central bank could see the euro weaken further if the ECB doesn't deliver.

The common currency was slightly higher at $1.126 on Tuesday.

The dollar slid 0.1 percent to 110.36 yen on Tuesday. U.S. services sector activity slowed in May as new orders tumbled, but was offset by a jump in employment to a two-year high.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, was flat at 96.787. (Reporting by Nichola Saminather; Additional reporting by Devika Krishna Kumar and Ritvik Carvalho; Editing by Shri Navaratnam)