* Graphic: Sterling and gilt yields http://bit.ly/2dgAXn1
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv (Adds reaction to services PMI, further background comment)
LONDON, June 5 (Reuters) - Sterling rose on Monday after dropping nearly half a cent against the dollar in early Asian trade in reaction to another militant attack in London at the weekend, days before a British parliamentary election.
Saturday's attack - the third in England in three months - saw sterling slip from $1.2893 to $1.2851 at the start of Asian trading.
A dip in an index of services sector sentiment had little impact, and sterling then jumped into positive territory after the latest poll from the ICM organisation showed Prime Minister Theresa May's Conservatives 11 points in front of the Labour opposition.
That ran counter to other polls showing Thursday's election race is extremely close, and helped push the pound 0.1 percent higher to $1.2907 by 1020 GMT. It gained 0.3 percent to 87.22 pence per euro.
Sterling has wobbled over the past two weeks, with investors' confidence that May would secure a landslide majority shaken by opinion polls predicting a wide range of outcomes for the June 8 snap election.
Polls have results ranging from an increased majority for the Conservatives to a hung parliament - worrying investors who had bet a landslide win for May would translate into a stronger bargaining position in Britain's exit talks with the European Union, which begin on June 19.
"There's greater two-way risk (to sterling). Even if May does just about enough to increase the majority - that could still potentially be sterling positive," said ING currency strategist Viraj Patel.
"The worst case outcome is this grey area of uncertainty - the hung parliament and no stable government formed by Friday or Monday - markets will sell off on that."
One-week sterling-dollar implied volatility - a hedge against price swings in the currency - was at 12.65 percent, near its highest levels since Jan. 17, when May set out her strategy for Britain's departure from the European Union.
Investors increased their bets against the pound versus the dollar in the week up to last Tuesday, the first increase in net "short" positions since May surprised financial markets with her announcement of the snap election.
May's personal approval ratings also turned negative for the first time, according to a ComRes poll published over the weekend.
"Regardless of this weeks outcome of UK elections, we believe the pound should prove a sell on rallies. This is especially true as investors focus will swiftly shift to actual Brexit negotiations later this month," Credit Agricole strategists wrote in a note. (Reporting by Ritvik Carvalho; Editing by Mark Trevelyan)