With Brent contracts hitting a record high in London, and US crude futures hitting $80 a barrel in New York, the FTSE 100 closed 95.6 points lower at 5,765.0.

On Wall Street, the Dow Jones industrial average closed down 166.90 points, or 1.5 per cent, at 10,846.30. Conflict in the Middle East also triggered “safe haven” switching from equities to bonds.

The worst falls in the FTSE 100 were seen in the mining sector, which tracked a sell-off in metals markets as strong unofficial Chinese economic data triggered fears of further rounds of interest rate rises in a country dominated by voracious demand for raw materials.

Oil prices were also supported by a hardening of Iran’s position to the UN Security Council on its nuclear programme, North Korea’s walking out of talks with South Korea and two explosions hitting crude pipelines in Nigeria, which raised fears of further supply problems from the West African state.

New York’s main oil contract, light sweet crude for delivery in August, soared as high as $76.85 before closing up $1.75 at $76.70. Crude for April 2007 delivery hit $80 a barrel.

In London, Brent North Sea crude for August delivery struck a historic high of $76.95 in intraday trade before settling at $76.69, up $2.30.

When adjusted for inflation, oil prices would need to rise to about $90 to eclipse the records that were set more than 20 years ago, when supplies tightened in the aftermath of the revolution in Iran and a war between Iraq and Iran.

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