OIL was in focus on Tuesday after prices rose sharply amid fears of supply disruptions in the Middle East, as the US considers re-imposing sanctions on Iran.

Geopolitical tensions helped drive demand and push the price of Brent Crude and West Texas Intermediate over two per cent to $67.4 and $63.5 respectively, levels last seen in March.

David Madden, market analyst at CMC Markets UK, said: "Brent Crude and WTI are higher today as tensions are rising in the Middle East.

"The US could reimpose sanctions on Iran - which is one of the largest oil producers in the world.

"Tensions between Saudi Arabia and Iran are also playing to the higher oil price."

Also helping prices along was news of falling output in Venezuela as the troubled country remains gripped in a political and economic crisis.

On markets, the FTSE 100 ended the day up 0.26%, or 18.34 points, at 7,061.27.

Royal Bank of Scotland was the index's biggest riser, gaining 2.29% to 263.5p, after reports suggested the lender working on a project to create a digital only challenger bank.

It was followed closely by tour operator Tui, which said that it plans to accelerate the expansion of its cruise fleet in Germany and UK off the back of high demand.

The firm's shares were up 2.28% to 1,568p at the close.

GKN nudged up 0.14% to 422.3p as its long drawn out saga with would-be suitor Melrose dragged on another day.

One of the engineering firm's largest shareholders - Colombia Threadneedle - said it plans to reject the £8.1 billion takeover offer and is instead backing to the GKN board and its overhaul plans.

The FTSE 250 close up 0.15%, or 29.79 points, at 19,723.56, with engineering firm Fenner leading the pack.

Its shares rose nearly 25% to 612.5p after French tyre maker Michelin said late on Monday that it has struck a deal to acquire the British manufacturer in a £1.2 billion deal.

The groups announced the deal after market close, with Michelin to shell out 610p per Fenner share, a 31% premium to the firm's closing price on March 16.

In Europe, the CAC 40 was up 0.57% and Germany's Dax 30 rose 0.74%.

Sterling, meanwhile, held firm against its major peers as traders digested the latest inflation data for February.

Figures from the Office for National Statistics (ONS) showed the Consumer Prices Index (CPI) cooled to 2.7% last month, down from 3% in January.

The pound was trading marginally down against the greenback at 1.399 US dollars and 0.5% up against the single currency at 1.142 euro.

The inflation figures come ahead of the Bank of England's interest rate decision on Thursday.

The biggest risers on the FTSE 100 were Royal Bank of Scotland up 5.9p to 263.5p, Tui up 35p to 1,568p, London Stock Exchange Group up 77p to 4,036p, Old Mutual up 4.7p to 247.5p and Evraz up 7p to 418.3p.

The biggest fallers on the FTSE 100 were Paddy Power Betfair down 220p to 7,425p, Just Eat down 20.6p to 715p, Centrica down 2.95p to 132.75p, WPP down 25p to 1,146p and MicroFocus down 19.6p to 991.4p.