* FTSE 100 down 0.3%, FTSE 250 down 1.8%

* Shell and BP climb as crude prices break above $119 a

barrel

* UK borrowing costs surge amid crisis-driven energy

price jumps

* BoE rate-cut expectations reversed due to inflation

concerns

(Updates to market close)

March 9 (Reuters) - UK stocks closed at their lowest

levels in about five weeks on Monday as rising oil prices

intensified inflation fears and concerns over potential interest

rate hikes amid the U.S.-Israeli war on Iran.

The blue-chip FTSE 100 slipped 0.3%, while the

mid-cap FTSE 250 lost 1.8%. Both indexes dropped for the

third straight day.

The benchmark index has now fallen about 7% from its record

high hit on February 27 as tensions escalated in the Middle

East.

Iran named Mojtaba Khamenei to succeed his father Ali

Khamenei as supreme leader, signalling that hardliners remain

firmly in charge in Tehran.

Shares of oil majors rose, with Shell   firming 2.4%

and BP   up 2.2%, tracking crude prices that hit their

highest since 2022, briefly breaking above $119 a barrel on

concerns over prolonged shipping and supply disruptions stemming

from the widening conflict.

The UK's energy index gained 2.3%.

Soaring energy prices have renewed inflation worries and

prompted a sharp pullback from February when two Bank of England

rate cuts were priced in.

Money markets largely expect the Bank of England to leave

interest rates unchanged for the rest of the year as the war

drives up energy costs and raises the spectre of another

inflation wave.

Traders were also weighing the potential costs of fresh

government support for energy bills after Prime Minister Keir

Starmer said easing the cost-of-living strain was at the top of

his mind.

Any new support would further strain public finances and

erode the buffer the government has to protect its fiscal rules.

British borrowing costs surged sharply, while sterling

tumbled on Monday.

Adding to the gloom, the latest REC/KPMG report on jobs

indicated that starting salaries for permanent staff in Britain

continued to decline, albeit at a slower pace, while the

downturn in new permanent hires showed signs of easing.

(Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Vijay

Kishore and Ros Russell)