The FTSE 100 surged upwards this morning as markets round the world hailed the rollout of coronavirus vaccines.
The blue-chip index was up one per cent an hour after markets opened, with energy and housebuilder stocks leading the charge.
Investors were also buoyed by hopes that the UK could still sign a free trade deal with the EU before the end of December.
This morning European Commission president Ursula von der Leyen said that negotiators had found a way forward on most issues, but warned that fisheries remained complicated.
The FTSE 250 of midcap companies, which is generally considered a good barometer for Brexit sentiment, rose 0.9 per cent.
The strong start meant that the FTSE was outtrading both the CAC and the DAX, which are both up 0.4 per cent.
The fast start in Europe comes after overnight gains on Wall Street as the US began its coronavirus vaccination programme.
The best performing stock was British Airways owner IAG, which rose 3.3 per cent. A vaccine could herald the start of the comeback for airlines, which have been hammered by the pandemic.
Housebuilders Barratt, Taylor Wimpey, and Persimmon were all up 2.6 per cent or more, while Shell rose 2.7 per cent.
This morning’s rise came after Wall Street pushed higher on the hopes of a new economic stimulus package.
After months of wrangling, the new measures would total $908bn – $748bn to fund 16 weeks of enhanced unemployment insurance, and a further $160bn to cover things like state and local aid.
CMC Markets chief analyst Michael Hewson said: “European markets have opened higher this morning buoyed by the twin prospect of a US stimulus deal coming to pass alongside the prospect of a UK/EU trade deal, with the only unknown as to which one might get agreed first.
“Von Der Leyen was at pains to stress that there was still some way to go, in terms of playing down market expectations, however she did say there was a path to an agreement, albeit a narrow one.
“It still seems more likely that there will be a deal than not. It would be an enormous failure of statecraft on the part of both sides, if neither party were able to agree a deal, even at this late stage.”