Global stock markets have continued to take a hammering as oil prices rocketed in their biggest weekly gain for six years, with no sign of a swift resolution to the conflict in the Middle East.

London’s FTSE 100 Index slumped 1.6% lower at one stage before closing about 130 points, or 1.2%, lower at 10,284.75 on Friday.

Declines were compounded by heavy falls on Wall Street, with the S&P 500 and Dow Jones indexes down about 1.1% after European markets had closed.

Gloomy jobs data in the US were adding to market woes, and there were similar declines across Europe as the Dax in Germany and France’s Cac 40 were both 1.5% down at one stage, before paring back some of the losses to close 0.9% and 0.7% lower, respectively.

By Friday evening, benchmark Brent crude prices shot up by as much as another 10% to 94 US dollars a barrel, reaching levels not seen for three years, after Kuwait reportedly joined Qatar and said it was beginning to halt energy production.

The sharp gains since the US-Israel war with Iran began on Saturday mean oil prices have risen by more than 25% so far this week – the biggest weekly gains since early 2020 at the height of the Covid-19 pandemic.

Comments from US President Donald Trump that there would be no end to the conflict until an “unconditional surrender” of the Iranian regime has further dashed hopes of a de-escalation.

Kathleen Brooks, research director at XTB, said: “There is not much to stop (oil) from hitting 100 dollars per barrel in the near term.

“Until the oil price stabilises it’s hard to see how stock markets and bond prices can recover.”

She cautioned over further stock market falls next week.

“If the war continues to escalate over the weekend, we think that markets will continue to sell off, especially after the rapid increase in oil prices today,” she said.

UK Government borrowing costs have also risen sharply this week due to inflation fears.

The yields on 10-year government bonds, also known as gilts, have jumped from 4.27% at the start of the week to 4.62% on Friday, with fears that soaring fuel and energy bills will put paid to further interest rate cuts.

“The rapid repricing of monetary policy expectations and the UK’s history of high energy prices means that UK gilts are particularly vulnerable to this energy price spike,” Ms Brooks said.