Oil Price Surge Fuels Inflation Fears, Dents Stock Prices

Stock prices in London closed lower on Thursday as oil prices surged above $105 per barrel and hotter-than-expected US producer inflation fueled concerns. The FTSE 100 index fell 0.6% to 10,608.92, while the FTSE 250 dropped 0.9% to 23,885.94.

The European Central Bank (ECB) raised interest rates as expected, increasing its three key interest rates by 25 basis points. The deposit facility rate now stands at 2.50%, the main refinancing operations rate is at 2.65%, and the marginal lending facility rate is at 2.90%. ECB president Christine Lagarde described the rate increase as a 'no-brainer'.

Oil prices surged due to intensifying military action between the US and Iran, which has fueled concerns over disruptions to global energy supplies and added to inflationary fears. The euro stood at $1.1625 against the dollar on Thursday, down from $1.1639 on Wednesday.