UK government borrowing costs rose sharply after oil prices climbed above $100 a barrel, as conflict involving Iran and disruptions to key shipping routes heightened fears of renewed inflation and interest-rate rises. The move matters because higher gilt yields increase the cost of servicing public debt and could push up mortgage, fuel and household energy costs.

Ten-year gilt yields exceeded 5.1 per cent, their highest level since before the 2008 financial crisis, while the FTSE 100 fell 0.7 per cent to 10,639.17. Brent crude reached about $101 after Houthi attacks on Saudi tankers added pressure to supply routes; Goldman Sachs said prices could exceed $120 later this year if disruption to the Strait of Hormuz persists.