Natural gas has overtaken oil to become the biggest concern for European bond traders as depleted supplies of the key fuel threaten a resurgence in inflation.

European gas prices are near five-month highs and winter contracts cost more than twice as much as they did a year ago. Yields on 10-year German and UK debt have touched levels not seen since March.

The shift in focus from oil to gas reflects concerns that energy shortages could drive up consumer prices and force central banks to maintain tighter monetary policy for longer.

Analysts warn that if winter demand exceeds supply, European economies could face renewed cost-of-living pressures, making natural gas the primary inflation risk for government bond markets.