FTSE gets sterling boost as Europe dragged lower by banks

* STOXX 600 down 0.5 pct, FTSE hits fresh record

* Banks down on Italy worries, "uninspiring" Basel newsflow

* Energy stocks down after OPEC disappointment

* London-listed Spirax surges to record after acquisition

* Live coverage: cpurl://apps.cp./cms/?pageId=livemarkets (Adds details, updates prices)

By Danilo Masoni

MILAN, May 26 (Reuters) - European shares slipped on Friday, dragged down by weaker banks, but British stocks managed to hit new records as sterling slid on a poll showing a narrower lead for the ruling party less than two weeks before a general election.

Sterling dived more than half a percent against both the dollar and euro after the poll showed Prime Minister Theresa May's lead down to just 5 percentage points over the opposition Labour Party.

The pan-European STOXX 600 index fell 0.5 percent and euro zone blue chips fell 0.7 percent by 0922 GMT, while in London both the main FTSE 100 benchmark and mid caps nudged higher to hit fresh record highs.

"The UK will hold a snap general election in less than two weeks and the political uncertainties should further weigh on the pound," said LCG analyst Ipek Ozkardeskaya in a note.

A weaker sterling supports export-oriented companies but also makes London-listed stocks cheaper to overseas investors.

Also helping British shares were gains in Spirax-Sarco , which rose 7.1 percent to a record high after the engineering firm agreed to buy US thermal technology firm Chromalox for $415 millions.

Business media group Informa (Frankfurt: A114PL - news) rose as brokers cheered to its results, while Restaurant Group (Other OTC: RSTGF - news) following an upbeat trading update.

In Europe banks were the biggest sectoral faller with their index down 1.3 percent to a one-week low.

Traders cited worries over the political situation in Italy and concerns surrounding ailing regional banks Popolare di Vicenza and Veneto Banca, even though the county's economy minister sought to reassure investors on Thursday that they will not be hit in any rescue of the two banks.

In the sector, Italy's UniCredit (EUREX: DE000A163206.EX - news) was the biggest faller, down 2.1 percent, while among the top 10 losers were also France's Societe Generale (Swiss: 519928.SW - news) , Germany's Deutsche Bank and Sabadell of Spain.

Exane analysts also flagged "uninspiring newsflow" from global regulators of the Basel Committee. A top official said on Thursday they would soon finalise rules to ensure banks hold enough capital to withstand rocky markets without taxpayer aid.

The oil & gas index fell 1.1 percent after OPEC extended output cuts but disappointed investors betting on longer or larger curbs, while oil prices recovered only part of the heavy slump seen on Thursday.

British oilfield services firm Petrofac (Amsterdam: PF6.AS - news) fell more 4 percent after several brokers more than halved their price targets on the stock. The company lost one third of its market value in the previous session after it suspended its chief operating office in response to a British investigation into alleged bribery, corruption and money laundering. (Reporting by Danilo Masoni; Editing by Toby Chopra)