Transport companies suffered the fallout from continually climbing oil prices this morning, with British Airways and cruise ship operator Carnival among the heaviest fallers.

Investors sold out amid mounting concerns that higher oil prices would add to already skyrocketing fuel costs.

British Airways, which has just raised its fuel surcharge for business class passengers, fell 3p to 215.75p. Carnival lost 38p to £16.80 and Easyjet also fell, down 7.5p at 284p.

The cost of a barrel of oil rose more than $1 this morning to just short of $136 as escalating geo-political tensions and Saudi Arabia’s promise to pump more oil if needed failed to win over a sceptical market.

However, rising oil prices boosted energy stocks, which led the FTSE 100 up 39.4 points at 5660.2.

BP rose 6p to 570.5p, Royal Dutch Shell added 18p to £19.71, and BG Group gained 23p at £12.54.

Shares in Go-Ahead, the bus operator, continued last week’s rally up another 80p to £18.20 after Credit Suisse made the group its top pick in the public transport sector.

Shire was the biggest riser in the FTSE, up 45p to 842p, after Goldman Sachs upgraded the stock to Buy. GlaxoSmithKline also rose, up 24p at £11.23, after the FDA regulator in the US delayed approval for its Promacta drug to allow time for a review.

Retailers suffered. Debenhams, the department store chain, hit a record low on concerns that it could breach its banking covenants and cut its dividend to save cash. Shares extended last week’s losses down 1p at 43p. ScS Upholstery’s shares were suspended as the struggling furniture retailer thrashed out a rescue deal. Shares were flat at 6.5p.

Elsewhere, house builders remained out of favour and banks continued to struggle.

Persimmon lost 10.75p to 260p, Taylor Wimpey fell 3.75p to 66p, and Barratt Developments was down 2.25p at 85.5p.

HBOS, Britain’s biggest mortgage lender, lost 7p to 275.25p after UBS trimmed its price target, although it did maintain its buy rating, saying shares were factoring in a lot of bad news.

Lloyds TSB was 4.25p lower at 323.25, as the market took the view it was unlikely to buy Allianz Dresdner Bank.

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