London’s FTSE 100 fell 1% to 10,725.6 points by 1019 GMT on Sept. 1, reaching a two-week low, while the domestically focused FTSE 250 dropped 1.9% and approached a one-month low. The midcap index was on track for its biggest one-day decline since March. Fresh exchanges of fire between the U.S. and Iran pushed Brent crude above $92 a barrel and drove a global bond selloff as investors assessed the potential impact on the world economy and inflation. The yield on the UK 10-year gilt (British government bond) reached its highest level since 2008. LSEG-compiled data showed markets pricing in at least 32 basis points of Bank of England rate increases by year-end, up from about 24 basis points the previous week. Rate-sensitive shares fell, including Barclays, Standard Chartered and Prudential, while housing goods and home construction stocks dropped 3.3%. Precious metal miners fell 7.1%, the largest sectoral decline, as higher yields weighed on precious metal prices. Nationwide Building Society said house prices rose in August, indicating demand remained supported despite an uncertain economic outlook. Energy stocks gained, with BP rising 3.9% and Shell adding 1.6% as crude prices climbed. Reckitt Benckiser advanced 4.4% after a U.S. jury favoured the company in a case involving claims that it failed to warn that products for premature babies could cause a deadly bowel disease. Bodycote jumped 4.1% after U.S.-based private equity firm Veritas Capital agreed to acquire the thermal processing services company for £1.85 billion ($2.51 billion). WPP fell 2.5% after a report said the advertisement company would cut up to 1,000 additional jobs by year-end.