European stocks closed deeper in the red Thursday amid a global bond market selloff in the wake of record-setting oil price inceases.

Britain's FTSE 100 index fell 0.5% by the session's close to 6,752 points, as solid advances for oil companies like BP and Shell were offset by sharp declines for globally-focused companies amid the recent surge in the pound.

The pound traded at its highest level against the dollar since the so-called 'Flash Crash' in early October as investors extend bets of a possible compromise in the country's Brexit negotiations with the European Union.

Sterling spiked around 1.5% in the afternoon session, taking the currency to 1.2691 against the greenback, its highest level since October 6, when sterling plunged more 6% in the space of two minutes during trading in Asia. The move also follows the currency's best month against the euro since the global financial crisis.

Equity benchmarks in Germany and France were also lower as sovereign bond yields rose in anticipation of sharper inflation with the DAX down 1% and  the CAC-40 down 0.39%.

European bond markets sold off heavily in the wake of record-setting oil price rises as investors count the cost of faster inflation and higher interest rates.

Benchmark 10-year German bunds rose 9 basis points in European trading to change hands at 0.33%, the highest since February, leading yield rises around the region and mirroring the sell-off seen in U.S. Treasury markets.

U.S. 10-year Treasury yields, which move in the opposite direction of prices, rose 8 basis points to 2.46%, adding to the 60 basis point increase seen since the November 8 election - the biggest move in seven years - and taking the benchmark borrowing cost to the highest level since July 2015.

A notable upside mover, however, in European stock markets were shares in Deutsche Bank (DB) , which led gains for European lenders with significant U.S. operations as investors reacted to the nomination of Steve Mnuchin as U.S Treasury Secretary.

Deutsche Bank shares rose more than 2% in Frankfurt, topping gainers on the DAX and extending its advance since the November elections past 18% while rival Credit Suisse (CS) gained 3.2% in Zurich to trade at Srf13.93. The gains bested the session's 1% advance for the Stoxx 600 Banks index.

Global oil prices, which have risen more than 13% in the past two sessions as traders re-set supply expectations after OPEC members agreed to trim ouput by 1.2 million barrels per day from January, continued their upward march Thursday.

Brent crude for delivery in March, the global benchmark added a further 4.26% to trade at $53.58 per barrel, extending a record-setting session Wednesday, that saw 700,000 contracts representing a value of more than $39 billion change hands.

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