The FTSE 100 has suffered its sharpest drop in nine months as fears about delays to US rate cuts added to worries about conflict between Israel and Iran.

The UK’s flagship stock index dropped as much as 2.1pc – its steepest decline since March last year – as more strong economic data in the US added to expectations that interest rate cuts will be delayed. It closed down 1.8pc or 147 points – the biggest decline since July last year.

European markets were already mired in red as stocks plunged amid a global sell-off of equities after top Israeli military officials said their country had no choice but to respond to Tehran’s barrage of more than 300 missiles.

On Wall Street, stocks were muted after suffering steep declines on Monday, with its so-called “Fear Gauge” — the Chicago Board Options Exchange Volatility Index — shooting up by more than a quarter over Friday and Monday to the highest since late October, several weeks after the initial Hamas attack on Israel.

Markets took a further hit this afternoon as factory output in the United States increased in March at a rate in line with expectations, as manufacturing and mining logged gains, according to the Federal Reserve.

It follows stronger-than-expected retail sales figures which sent US markets tumbling on Monday as traders opted against fully pricing in an interest rate cut before November.

Read the latest updates below.

That’s it for today on the markets blog. Do join us again in the morning but I’ll leave you with a story from Tim Wallace:

Read the full report…

The Governor of the Bank of England has given an interview this evening at an IMF meeting saying there was “strong evidence” that inflation is coming down, signalling that the Bank of England is still on track to cut rates.

On the so-called “soft landing” that people wish for, he said: “We always want to see the landings before we judge them”.

He also emphasised the importance of the free movement of goods amid growing pressure to rely less on Chinese exports. “I’m a very strong supporter from free trade”, he said, before saying that while diversification is needed, we shouldn’t give up on free trade.

A top English wine producer has reported rising profits as consumers treated themselves to a more expensive bottle of wine despite cost-of-living pressures.

Andrew Carter, chief executive, told CityAM that demand for wine was strong as people took pleasure from small luxuries. “We believe at a price point of £30 that we’re far more accessible to the majority of consumers” than other luxury purchases, he said.

Chapel Down said revenue was up 15pc to £17.2m and profit up 16pc to £1.9m. It said that it had benefited from a record harvest that meant it could produce more bottles.

The Footsie dropped after Israel’s army chief vowed a response to Iran’s attack on his country.

The FTSE 100 lost 1.8pc. The biggest riser was chemicals company Croda International, down 1.3pc, followed by hip replacement manufacturer Smith & Nephew, up 0.4pc. The biggest faller was Ocado, down 5.8pc, followed by pensions firm Phoenix, down 5.7pc.

The FTSE 250 dropped by a matching amount. The biggest riser was Plus500, up 2.4pc, followed by Harbour Energy, up 1.8pc. Dr Martens fell 29.9pc, the biggest drop in the index today, followed by Auction Technology, down 15.6pc.

We reported this morning that EasyJet has scrapped flights to Israel for the whole of the summer season. Our transport industry editor Christopher Jasper has more:

The Treasury has appointed the first-ever female boss of the Debt Management Office (DMO), the body responsible for selling hundreds of billions of pounds of government debt every year.

Jessica Pulay will oversee planned government debt sales of £265.3bn in the current financial year, one of the biggest amounts on record.

Ms Pulay, 57, joined the organisation in 2015 from the European Bank for Reconstruction and Development. Her early career included roles at Morgan Stanley, Goldman Sachs and Deutsche Bank.

Jeremy Hunt, the Chancellor, said: “She brings with her over three decades worth of relevant experience, is highly regarded in the market, and the appointment provides strong continuity to a critical government function as the DMO looks to the future.”

Ms Pulay will succeed Sir Robert Stheeman who is retiring at the end of June after 21 years heading the DMO.

Global recruitment company Robert Walters said companies were rapidly cutting back on new hires, sending its shares tumbling by 5pc. Melissa Lawford has the details:

China’s economy grew faster than expected in the first quarter of the year amid fears it is flooding the West with heavily subsidised, low-cost solar panels and electric cars. Tim Wallace reports:

Janet Yellen said today that she accepted President Joe Biden’s view that US Steel should remain in American hands for the benefit of American workers and the country, in stark contrast to Britain, which relies on foreign investors.

The US Treasury Secretary told a news conference that she could not discuss a review of the proposed $14.9bn acquisition of U.S Steel by Japan’s Nippon Steel by the Committee on Foreign Investment in the United States. But she said:

Morgan Stanley’s first-quarter profit beat estimates on Tuesday, fueled by a resurgence in investment banking and growth in wealth management, sending shares up 3.7pc.

Investment banking revenue climbed 16pc from a year earlier.

“It was an excellent quarter all around,” Chris Kotowski, an analyst at Oppenheimer, wrote in a note. The bank achieved a “near-perfect print” like rival Goldman Sachs did on Monday, Mr Kotowski added.

Morgan Stanley reported profit of $2.02 per share, sailing past analysts’ average estimate of $1.66, according to LSEG data. Total revenue rose to $15.14bn (£12.16bn) compared with $14.5bn a year earlier.

“We saw building momentum in investment banking, both in our M&A and underwriting pipelines across corporate and financial sponsor clients,” chief executive Ted Pick told investors on Tuesday. He expects a “multi-year M&A cycle” to begin now and last 3 to 5 years.

The head of the World Trade Organisation has warned that the 10pc import tariffs proposed by Donald Trump would result in a “tit for tat approach” and a “lose-lose” situation, according to Reuters.

Ngozi Okonjo-Iweala said the plan would “upend the stability and predictability of trade”.

ScottishPower is handing over £1.5m in refunds and compensation after breaching the energy price cap by overcharging nearly 1,700 customers during the height of the energy crisis and in the years before.

Ofcom said that the energy supplier had charged a group of direct debit customers a higher rate intended only for those who pay manually.

The regulator said Scottish Power agreed to pay an average of £294 to each affected customer, half of which is compensation. In addition, ScottishPower is to pay £1m to an Ofgem fund that benefits charities supporting vulnerable customers.

Dan Norton, Ofgem’s Deputy Director for Price Protection, said:

ScottishPower said that, on discovering the error, it took “swift corrective action and the compensation package agreed with Ofgem show both how seriously we take this matter and our commitment to making it right”.

The FTSE 100 has suffered its sharpest drop in more than a year as more strong economic data in the US added to expectations that interest rate cuts will be delayed.

Factory output in the United States increased in March at a rate in line with expectations, as manufacturing and mining logged gains, according to the Federal Reserve.

Industrial production was up 0.4pc in March, holding steady from February’s revised figure, the Fed said in a statement.

In particular, manufacturing output gained 0.5pc last month, hovering at 0.8pc above the level a year earlier, in a sign that the US economy is proving resilient, potentially fuelling inflation if interest rates are cut.

Shortly afterwards, the FTSE 100 deepened its declines, dropping by 2.1pc in its steepest decline since March last year.

The Dow and the S&P 500 opened higher despite the Middle East turmoil, with health insurers leading the charge following upbeat results from industry major UnitedHealth.

The Dow Jones Industrial Average rose 257.11 points, or 0.7pc, at the open to 37,992.22.

The S&P 500 opened higher by 2.77 points, or 0.1pc, at 5,064.59, while the Nasdaq Composite dropped 28.64 points, or 0.2pc, to 15,856.38 at the opening bell.

Rising tensions in the Middle East will force central banks to delay interest rate cuts if Iran’s attack on Israel unleashes higher oil prices and a fresh wave of inflation, the International Monetary Fund has warned.

Our economics editor Szu Ping Chan in Washington has the latest:

The Treasury has appointed Jessica Pulay as the next chief executive of the Debt Management Office (DMO), responsible for selling hundreds of billions of pounds of government debt every year.

Ms Pulay will succeed Robert Stheeman who is retiring after 21 years heading the DMO.

She will oversee planned gilt sales of £265.3bn in the current 2024/25 financial year, one of the heaviest issuance remits on record.

Ms Pulay, 57, joined the DMO as co-head of policy and markets in 2015. Previously she worked at the European Bank for Reconstruction and Development for 16 years and was deputy head of funding. Her early career included roles at Morgan Stanley, Goldman Sachs and Deutsche Bank.

She is chair of the Wallace Collection, an art gallery in central London, and was made a CBE in December. She is a board member of the International Finance Facility for Immunisation, an organisation that raises funds for vaccination programmes.

Britain’s economic prospects have been downgraded by the International Monetary Fund (IMF) for the second time in three months as it warned the country had become dependent on foreign-born workers for growth.

Our economics editor Szu Ping Chan in Washington, and deputy economics editor Tim Wallace, have the story:

Read how the IMF downgraded its forecasts for UK growth for the next two years.

Discount retailer B&M has revealed its sales jumped by a tenth over the past year, as cost-conscious shoppers continued to hunt for deals.

The chain, which sells everything from household furniture and DIY products to cupboard staples and clothing, said it had a “relentless” focus on low prices for everyday products.

B&M European Value Retail, which also incorporates Heron Foods and B&M in France, said group revenues increased by 10.1pc to £5.5bn in the year to the end of March, compared with the previous year.

This was driven by a higher volume of sales and revenues increasing on a like-for-like basis, meaning it excludes newer stores which skew the comparison.

Revenue growth also benefited from an extra week of trading including in the financial year, as well as Easter being celebrated earlier in the year.

In the UK, sales at B&M hit £4.4bn, which was 3.7pc higher than the previous year on a like-for-like basis, driven by customers buying more products.

B&M opened 47 new stores across the UK last year as it continued its rapid expansion across the country.

Wall Street is on high alert for potential swings in stock markets after Israel vowed to respond to Iran’s unprecedented attack at the weekend.

US stock markets are expected to open higher despite a global sell-off in equities after top Israeli military officials said their country had no choice but to respond to Tehran’s barrage of more than 300 missiles.

However American analysts are preparing for sharp changes, with Wall Street’s so-called ‘Fear Gauge’ — the Chicago Board Options Exchange Volatility Index — shooting up by more than a quarter over Friday and Monday to the highest since late October, several weeks after the initial Hamas attack on Israel.

PwC is planning to investigate an anonymous letter containing “false allegations” over how the firm “turned a blind eye” to its audit of Chinese property giant Evergrande.

Bank of America revealed its trading revenues performed better than expected in the first three months of the year.

The second-largest US bank enjoyed a 15pc jump in revenue from equities trading to $1.9bn despite high interest rates and geopolitical tensions.

It managed to make $6.7bn during the quarter, at the top of analysts’ net-income estimates.

Chief executive Brian Moynihan said: “Bank of America’s sales and trading businesses continued their strong 2023 momentum this quarter, reporting the best first quarter in over a decade.”

Meanwhile, Bank of America’s non-interest expenses soared 6.2pc from a year earlier to $17.2bn.

Met interest income, a key source of revenue for the bank, fell 2.9pc to $14bn in the first quarter of this year.

The “extent of the retaliation” by Israel will be key to what happens next for markets, according to analysts.

Global stocks have sunk after Israel’s army chief vowed a response to Iran’s attack on his country, with sentiment also dented by diminishing US interest-rate cut hopes and mixed earnings.

Matthew Ryan, head of market strategy at financial services firm Ebury, said: “The key for markets will now be the extent of the retaliation.”

Joshua Mahony, an analyst at Scope Markets, added: “Sentiment is shaky at best right now with heightened geopolitical tensions in the Middle East, coming alongside increased concerns that the Federal Reserve may opt to maintain interest rates at the current levels for some time yet.”

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “The ongoing uncertainty has left its mark on stocks across the globe, with the effect of fear being compounded by a mixed start to earnings season.”

US stock markets are largely on track to edge lower when trading begins later as investors remain wary of the conflict in the Middle East.

Wall Street closed sharply lower on Monday as stocks were pressured by a jump in Treasury yields and concerns about the rising geopolitical tensions between Iran and Israel.

The yield on the 10-year government bond last stood at 4.65pc, a day after data showed US retail sales increased more than expected in March amid a surge in receipts at online retailers.

This was further evidence that the economy had ended the first quarter on solid ground, dampening hopes for interest rate cuts.

Traders are no longer fully pricing in a Fed rate cut before November.

Meanwhile, Israelis awaited word on how Prime Minister Benjamin Netanyahu would respond to Iran’s first-ever direct attack, as international pressure for restraint grew over fears the conflict could escalate.

In premarket trading, the Dow Jones Industrial Average was up 0.3pc but the S&P 500 and Nasdaq 100 were down 0.1pc .

X, the social media platform formerly known as Twitter, is planning to start charging all new users a “small fee” in order to interact with posts, its owner Elon Musk has said.

The Tesla and Space X boss said charging new users to post, like and reply was the “only way” to stop fake or bot accounts on the platform.

Last year, X, formerly known as Twitter, launched a pilot scheme in New Zealand and the Philippines which required new users to pay a one dollar a year subscription in order to access key features.

Mr Musk’s comments suggest that trial is to now be rolled out more widely. He said:

He later added: “The onslaught of fake accounts also uses up the available namespace, so many good handles are taken as a result.”

In a further reply to another account which questioned the approach, Mr Musk said the fee could only be in place for the first three months after a new user joins the platform.

The billionaire said eradicating fake and bot accounts was a key priority for him when taking over the platform in late 2022. However, many users have since reported seeing an increase in spam content, in part due to Mr Musk’s substantial cutbacks to staff, including the firm’s content moderation team.

EasyJet has suspended flights to Israel until October 27 after Israel pledged to “respond” to Iran’s attack over the weekend.

A spokesman for the budget airline said:

Average petrol prices have risen by nearly 8p per litre so far this year, figures show, as oil prices tick higher amid the conflict in the Middle East.

A 1.6p increase over the past week has brought the average price of a litre of petrol at UK forecourts to a five-month high of 148.5p, according to Government data.

That is compared with 140.8p at the start of the year. There has not been a sharper weekly rise since August 2023.

Average pump prices for diesel have increased to 157.5p, which is the most expensive level since November 2023.

RAC fuel price spokesman Simon Williams said:

The incoming Deputy Governor of the Bank of England has pledged to improve the institution’s economic forecasting after a review by a former Federal Reserve chairman found “significant shortcomings” in the practice.

Clare Lombardelli, who begins in her new role in July, told MPs today that she could “absolutely” assure them that there will be “a shakeup in response” to the withering assessment led by former Federal Reserve chairman Ben Bernanke.

The US central banker said that there had been “deficiencies” in Threadneedle Street’s ability to predict the impact of economic shocks such as Russia’s invasion of Ukraine.

Mr Bernanke warned the accuracy of the Bank’s predictions had “deteriorated significantly” in the wake of the pandemic.

Ms Lombardelli, a former Treasury official, told the Treasury Select Committee:

Microsoft is investing $1.5bn (£1.2bn) in an Abu Dhabi-based artificial intelligence business as tech giants deepen their ties to the UAE.

Our senior technology reporter Matthew Field has the details:

Wholesale gas prices have risen amid fears that an Israeli retaliation to the attack by Iran at the weekend could spark a wider conflict in the Middle East.

Europe’s benchmark contract jumped as much as 6.6pc as traders re-evaluated the outlook for Europe’s energy supplies.

Prices had fallen by 30pc since the start of the year after a mild winter meant that stockpiles were left relatively full.

However, gas prices have now clawed back those losses.

The UK equivalent contract has gained as much as 6.9pc today.

A huge fire has devastated Copenhagen’s 17th century former stock exchange toppling the historic building’s landmark spire in front of horrified witnesses.

The 54-metre (180-foot) spire disappeared into flames at the Borsen building, which has been undergoing renovation.

The spire snapped and crashed down onto the street below. Dramatic photographs and video showed huge plumes of black smoke emerging from the building.

The Borsen building, commissioned by King Christian IV and built between 1619 and 1640, is one of Copenhagen’s best known landmarks.

“Terrifying images from Borsen this morning. 400 years of Danish cultural heritage going up in flames,” Culture Minister Jakob Engel-Schmidt wrote in a post to X, the former Twitter.

The images recalled the disaster at Notre Dame Cathedral in Paris, almost five years ago to the day when its spire was also destroyed by a fire.

“This is our Notre Dame, it is our national treasure,” said Elisabeth Moltke, a 45-year-old Copenhagen resident, who watched the blaze. Others could not hold back tears as they watched the devastation.

Follow the latest here.

Shares in the most valuable semiconductor company listed on the London Stock Exchange have plunged after it announced it would miss its sales forecast for the year.

Alphawave IP, the Anglo-Canadian microchip designer, plunged by 31.3pc after it said revenues would reach about $318m to $323m, which is below the original outlook for the year of between $340m to $360m.

Bosses also warned that underlying profits would fall, blaming its accelerated transition away from China, and changes in expected returns from long-term contracts in “advanced nodes”.

Alphawave’s shares have plunged nearly 75pc since it went public on the London Stock Exchange in May 2021, a deal that initially valued the chip designer at £3bn.

The company, which is chaired by US tech executive John Lofton Holt, develops and licences designs for “chiplets”, tiny elements of microchips that can be combined to create faster and more efficient computer or data centre processors.

Last year it was forced to suspend its shares after auditors delayed issuing its final accounts.

Stocks around the world have fallen amid growing fears of a wider war in the Middle East after Israel’s army chief vowed a response to Iran’s unprecedented attack on his country at the weekend.

European shares dropped to a six-week low, with the STOXX 600 – which includes stocks from across the continent – down 1.5pc.

Equity indexes in Germany, France, Italy and Spain had all shed between 1.3pc and 1.7pc.

Traders were on edge as the world awaited Israel’s response to Iran’s first-ever direct attack against the country as international pressure for restraint grew on fears of a widening conflict in the Middle East.

In Asian trading overnight, the Shanghai Composite index lost 1.7pc to 3,007.07 even though the Chinese government reported that the economy grew at a surprisingly fast 5.3pc annual rate in the first quarter of the year. In quarterly terms it expanded at a 1.6pc pace.

The Hang Seng in Hong Kong lost 2.1pc to 16,248.97. Tokyo’s Nikkei 225 fell 1.9pc to 38,471.20

UK packaging giant DS Smith has agreed a £7.8bn takeover by a US rival after the suitor emerged victorious in a bidding battle for the company.

Under the all-share deal, Memphis-based International Paper will own around 66.3pc of the combined group, with FTSE 100 listed DS Smith owning the remaining 33.7pc.

It comes after International Paper muscled in on a £5.1bn deal between DS Smith and London-listed rival Mondi, that was agreed in principle last month.

International Paper will also seek a secondary listing of its shares on the London Stock Exchange following the takeover, which values each DS Smith share at 415p.

But it warned over back office job cuts across the combined workforce, with around 400 roles so far earmarked as being at risk, though this is subject to a review.

It said this was around 0.6pc of the combined workforce worldwide and would focus on “corporate, head office and senior management positions across its and DS Smith’s respective businesses”.

Most roles impacted would be across corporate and administrative departments and come as part of aims to save at least £413m in “synergies” after the acquisition.

The companies did not say how many jobs were likely to go in the UK or specifically across DS Smith’s operations.

DS Smith has 4,750 staff in the UK and 30,000 worldwide, while International Paper has about 40,000 employees globally, of which 33,000 are based in the US.

As I write, every single company on the FTSE 100 is in the red today amid a global stocks sell-off triggered by the tensions in the Middle East.

The UK’s blue-chip index is down 1.5pc while the FTSE 250 is down 1.6pc.

Shares of Dr Martens have now plunged 29.8pc after the bootmaker named a new chief exective and flagged a challenging fiscal 2025 amid weak US demand.

Superdry was last down 18.8pc after the retailer launched a turnaround plan that would involve restructuring of its UK property estate and retail cost base, along with an equity raise that would take the company private.

Rob Wood, chief UK economist at Pantheon Macroeconomics, said the rising unemployment rate and fall in those on payrolls will “embolden” Bank of England policymakers to look at interest rate cuts.

Unemployment hit a six-month high of 4.2pc in the three months to February, according to the Office for National Statistics, while more timely data from HM Revenue & Customs revealed that the number of workers on payrolls fell by 67,000, or 0.2pc, to 30.3 million in March.

This is the biggest drop since the quarter to November 2020 at the height of the pandemic, although the figures are estimates and subject to revision.

Mr Wood said:

He said the stronger-than-expected wage figures complicate the picture, with rises in earnings expected to be pushed higher by this month’s near-10pc rise in the national living wage.

“Solid earnings growth in February will, we think, mean rate setters want to wait until June before lowering interest rates, so they can see the post-minimum wage hike data,” he said.

Wise shares suffered their sharpest drop in nearly a year after it revealed transaction volumes that were lower than analysts expected.

The money transfer business slumped by as much as 12pc after transaction volumes grew by 15pc in the fourth quarter to £30.6bn, compared to estimates of £32.12bn.

Citi analyst Pavan Daswani said it was a “weak set of results” after shares rallied by 51pc since October amid a wider recovery in the fintech sector.

Wise co-founder and chief executive Kristo Käärmann said: “Our continued customer growth laps strong results and tells us that the investments that we’re making are meeting real needs, giving me confidence that we’re progressing well on our mission.”

The number of workforce dropouts claiming to suffer long-term sickness has surged to a record high as Britain’s labour crisis deepens.

Our deputy economics editor Tim Wallace has the details:

Read how Britain has become “an international outlier”.

The pound stayed at a five month low against the dollar as investors rushed to the safe haven US currency amid the rising Middle East tensions.

Sterling was last down 0.1pc against the dollar at $1.244 , and flat against the euro, which is worth 85p.

The FTSE 100 has plunged after Israel vowed to respond to Iran’s unprecedented attack at the weekend.

The UK’s flagship stock index dropped as much as 1.5pc as trading began in London after top Israeli military officials said their country had no choice but to respond to Tehran’s barrage of more than 300 missiles.

The FTSE 250 is down 1.4pc, while the Dax in Germany has fallen 1.4pc and Cac 40 in France has dropped 1.5pc amid fears the rising tensions in the Middle East could disrupt global supply chains.

Brent crude oil has climbed back above $90 a barrel after it hit a six week high last week and despite Foreign Secretary Lord Cameron and US President Joe Biden urging restraint from Israel.

Boot maker Dr Martens stumbled heavily as trading began after warning that profits will fall next year.

The retailer’s shares plunged by 25pc after it said it expects revenues to decline in its 2025 financial year and pre-tax earnings to be as little as a third of this year’s level.

It warned that USA wholesale revenue is anticipated to be down year-on-year by a double-digit percentage while it also battles inflating costs.

Chief executive Kenny Wilson said:

UK stock markets dropped steeply as trading began after the latest jobs figures raised doubts about interest rate cuts – and amid the rising tensions in the Middle East.

The FTSE 100 has sunk 1.3pc to 7,860.63 while the midcap FTSE 250 has fallen 1.2pc to 19,473.11.

After the latest jobs data, Jake Finney, economist at PwC UK, said:

Superdry has announced it plans to delist from the London Stock Exchange as the troubled fashion chain launched a restructuring plan and an equity raise.

It said it would be forced to enter into administration if it did not go ahead with the plans.

The company is looking to raise up to £10m through an equity raise, meaning through the sale of new shares, which will be fully insured by its founder and chief executive Julian Dunkerton.

Superdry said it wants to delist from the London markets as a result of the plans, which need to be implemented “away from the heightened exposure of public markets”.

Mr Dunkerton said the proposals mean “putting the business on the right footing to secure its long-term future following a period of unprecedented challenges”.

Liz McKeown, the director of economic statistics at the Office for National Statistics, said:

The number of people out of work due to long-term sickness has hit a record high, official figures show.

There were 9.4m people economically inactive in the three months to February, according to the Office for National Statistics, which is the highest since 2012.

Of those, 2.83m said long-term sickness is the reason they are out of work.

The rate of UK unemployment rose to 4.2pc in the three months to February in a boost to hopes of interest rate cuts.

The jobless rate was up from 3.9pc in the previous three months, the Office for National Statistics said, and was also higher than the 4pc forecast.

The Bank of England has long said that it is looking closely at the labour market for signs that it is cooling, which would give policymakers the confidence to begin cutting interest rates.

Wages grew faster than expected, official figures show, in a potential risk to inflation.

UK average regular earnings growth eased back to 6pc in the three months to February, according to the Office for National Statistics, compared to 6.1pc in the three months to January.

However, it grew faster than the 5.8pc expected by economists.

Real pay also lifted 2.1pc after taking inflation into account, rising at its fastest since September 2021.

Oil prices have risen after Israel vowed to respond to Iran’s unprecedented attack at the weekend.

Brent crude, the global benchmark, has climbed 0.6pc in early trading towards $91 a barrel after top Israeli military officials said their country had no choice but to respond to Tehran’s barrage of more than 300 missiles.

Israel’s military chief of staff Herzi Halevi said the country would respond. He provided no details.

The jump in the price of oil comes after it hit a six week high last week and despite Foreign Secretary Lord Cameron and US President Joe Biden urging restraint.

Warren Patterson, head of commodities strategy for ING, said the possibility of a direct response from Israel “means that this uncertainty and tension will linger for quite some time”.

He added: “The more escalation we see, the more likely we are to see oil supply from the region impacted.”

Brent crude had eased 35 cents to $90.10 per barrel on Monday but has risen significantly this year.

The jump in oil prices has been raising worries about a knock-on effect on inflation, which has remained stubbornly high.

After cooling solidly last year, inflation has consistently come in above forecasts in each month so far of 2024.

Thanks for joining me. Brent crude oil has risen towards $91 a barrel after Israel said it would be forced to respond to Iran’s attack on the country at the weekend.

The vow comes despite Europe and the US urging restraint after deeming Tehran’s attack on Saturday a “failure”.

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3) New York threatens London’s fintech dominance, says Revolut UK chief | The City risks losing talent to the US just as investors regain confidence

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5) Nike on the back foot as shoppers flock to Adidas for Sunak’s favourite trainers | Demand for Sambas sees German sportswear giant outpace its rival

Asian shares skidded Tuesday following a slump on Wall Street after higher yields in the US bond market cranked up pressure on stocks.

The Shanghai Composite index lost 1.4pc to 3,013.84 even though the Chinese government reported that the economy grew at a faster-than-forecast annual rate of 5.3pc in the first quarter of the year. In quarterly terms it expanded at a 1.6pc pace.

The Hang Seng in Hong Kong lost 1.9pc to 16,279.66.

Tokyo’s Nikkei 225 fell 2.1pc to 38,402.59 as the dollar continued to gain against the Japanese yen, hitting fresh 34-year highs. By midday the dollar was trading at 154.33 yen, up from 154.27 yen.

Wall Street closed sharply lower on Monday amid rising US Treasury yields as simmering tensions in the Middle East helped curb investor risk appetite.

Meanwhile US retail sales data for March blew past analyst expectations, providing the latest evidence in the case for the resilience of the American consumer but also suggesting the Fed could hold off on cutting interest rates for longer than previously anticipated.

The three major US stock indexes reversed initial gains to extend Friday’s sell-off.

The Dow Jones Industrial Average fell 0.65pc, to 37,735.11, the S&P 500 lost 1.20pc, to 5,061.82, and the Nasdaq Composite dropped 1.79pc, to 15,885.02.

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