GLOBAL MARKETS-European, UK shares snap winning streak, silver surges

* European, UK shares snap 4-day winning streak

* Italian banks in focus again, sector down 3.4 pct

* Property firms, financials weigh on FTSE

* UK midcaps slide more than 2 percent

* Silver (Shenzhen: 300221.SZ - news) surges to near two-year high

By Vikram Subhedar

LONDON, July 4 (Reuters) - The post-Brexit recovery across European markets sputtered to a halt on Monday with major equity indices lower and safe-haven demand for precious metals helping the price of silver surge to near a two-year high.

Financial and commodities markets in the United States were closed for the July 4 public holiday. U.S (Other OTC: UBGXF - news) . stock futures were up 0.1 percent in low volumes.

Europe's Stoxx 600 fell 0.7 percent and London's FTSE 100 fell 0.9 percent dragged lower by weaker financials and homebuilders' shares.

Earlier in the day, the Australian dollar recovered from a wobbly start caused by political uncertainty post-election while Asian shares and base metal prices rose, partly on expectations of economic stimulus from China.

JPMorgan (LSE: JPIU.L - news) strategists warned investors against chasing the rally in risky assets.

"We do not believe that we will see a sustained upmove. Positioning is not washed out, market internals are not positive and political uncertainty will linger," they wrote in a note.

Caution is likely to persist through the week with the Bank of England scheduled to publish its quarterly financial stability report on Tuesday, the June U.S. Federal Reserve meeting minutes due on Wednesday and U.S. jobs data on Friday.

In bond markets, worries about the health of Italian banks and some 20 billion euros ($22.2 billion) of bond supply in the region this week combined to halt a post-Brexit tumble in regional borrowing costs.

Italian banking index fell more than 3.5 percent on Monday, while the European Central Bank asked Italy's Banca Monte dei Paschi (Milan: BMPS.MI - news) di Siena to slash its bad debts by 40 percent over three years, heaping more pressure on Rome and Brussels to stabilise the Italian banking system.

Italy is in talks with the European Commission on devising a plan to recapitalise Italian lenders with public money limiting losses for bank investors, an EU spokeswoman said on Sunday.

UK POLITICS

Fears of an economic slowdown in the Britain have taken a toll on shares of smaller domestically focused companies, which have significantly underperformed export-oriented bluechips. This continued on Monday with the FTSE midcaps index off more than 2 percent.

Sterling came under pressure following poor data that showed Britain's construction sector PMI survey suffered its worst contraction in seven years in the run up to the vote to leave the European Union.

The currency recovered some ground in late trading, rising 0.1 percent to $1.3284, still nursing its losses after an 11-percent plunge to a 31-year trough of $1.3122 a week ago following last month's shock Brexit vote.

The weekend's headlines were dominated by mixed messages from the candidates seeking to replace David Cameron as Conservative Party leader and prime minister, offering markets little certainty about the outlook for the months ahead.

The euro was little changed at $1.1140 and was down slightly against its Japanese counterpart at 114.27 yen .

Crude oil prices extended gains from Friday's surge after comments by the Saudi energy minister that the oil market is heading towards balance despite signs of slowing demand in Asia.

Spot gold added 0.7 percent to $1,352.10 an ounce after gaining 1.5 percent on Friday and about 9 percent in June.

Silver spiked 3 percent higher to $20.30 an ounce, breaking the $20-dollar level for the first time in nearly two years. ($1 = 0.8991 euros) (Reporting by Vikram Subhedar; Editing by Toby Chopra)