London's FTSE indexes fall as rate-cut bets fade and oil surge renews inflation fears

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* FTSE 100 down 1.1%, FTSE 250 down 1.6%

* Shell and BP climb as crude prices approach $120 a barrel

* GSK to get $690 million from Alfasigma for linerixibat rights

March 9 (Reuters) - UK stocks fell to their lowest levels in nearly two months on Monday as rising oil prices intensified inflation fears and concerns over potential interest rate hikes amid ongoing U.S.-Israeli tensions with Iran.

The blue-chip FTSE 100 slipped 1.1% by 0937 GMT, while the mid-cap FTSE 250 lost 1.6%. Both indexes were coming off their worst weekly performance in nearly a year.

Shares of oil majors rose, with Shell ? firming 1.3% and BP? up 0.3%, tracking crude prices that broke above $100 a barrel on concerns over prolonged shipping and supply disruptions stemming from the widening Middle East conflict.

The UK's energy index gained 1.6%.

Iran named Mojtaba Khamenei to succeed his father Ali Khamenei as supreme leader, signalling that hardliners remain firmly in charge in Tehran.

Soaring energy prices have renewed inflation worries and prompted a sharp pullback in Bank of England rate-cut bets.

Money markets pricing indicated a more than 40% chance the Bank of England would raise interest rates this year, a sharp reversal from February when two cuts were priced in.

Traders were also weighing the potential costs of government support for energy bills after UK Prime Minister Keir Starmer said supporting people with the cost of living would be at the top of his mind.

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.

British government bonds tumbled again on Monday, while the pound was on track for its biggest daily fall in over a month.

In corporate news, GSK dipped 0.6% after the drugmaker said it will receive up to $690 million from Italian pharmaceutical company Alfasigma for the worldwide rights to linerixibat, an experimental treatment for severe itching in patients with a rare liver disease. (Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Vijay Kishore)