London's FTSE 100 Index fell 1% below 5400 early on as the commodity's latest surge above 145 US dollars a barrel sent a raft of shares falling.

The blue-chip index has not been as low during a trading session since January this year. The Frankfurt Dax and Paris Cac 40 share indices were also 1% lower, while New York's Dow Jones Industrial Average fell 1.5% on Wednesday.

Brent crude for August delivery traded on the London-based ICE Futures Exchange reached 145.75 US dollars early on Thursday before easing back slightly.

Global oil prices are up by around 50% since the start of the year, and have doubled over the past 12 months.

The higher prices have been a main driver in rising inflation, which could result in an interest rate rise from the Bank of England as policymakers try to slow down spending.

Crude's latest spike comes on a combination of concerns over a weak US dollar, surging oil demand and fears about supply disruptions in the Middle East and Africa.

The European Central Bank is also expected to raise interest rates, weakening the dollar further and so tempting even more investors into oil.

Among the Footsie shares down were British Airways, which fell 2%, and Marks & Spencer, which dropped another 4% following Wednesday's 25% slump amid fears for the group's future trading.

Oil's latest surge also comes amid escalating tensions between the US and Iran. Traders are worried Tehran could try to halt shipments and seize control of the strategically important Strait of Hormuz if attacked by Israel or the US. About 40% of the world's tanker traffic passes through the Middle Eastern choke-point.