Europe hit by high oil prices and falling dollar

European equity markets fell on Monday as crude prices rose above $73 a barrel, re-igniting fears that high raw materials costs could lift inflation, while stifling earnings growth.

By midday, the FTSE Eurofirst 300 had recovered some lost ground, but remained 0.3 per cent lower at 1,309.27. Frankfurt

Equities were hit as oil spiked above $73 a barrel after Iran said US action against its nuclear programme could result in supply disruption. Meanwhile, the dollar, which fell sharply against most other currencies on Friday after weaker-than-expected US jobs data, resumed its decline.

Stocks with the most exposure to the falling dollar were the worst hit trade. Luxury goods makers, which are highly geared to the US export market, fell