FTSE 100 jumps as Covid vaccine prompts recovery hopes

The London stock market has risen sharply on the first trading day of 2021 amid hopes that the newly-approved Oxford coronavirus vaccine could spark a faster economic recovery from the pandemic than feared.

The FTSE 100 leapt by almost 3% on Monday morning, gaining by more than 150 points to reach 6,638, after the Covid vaccine developed by Oxford University and AstraZeneca was administered for the first time since its approval by the British medicines regulator last week.

Shares in Entain, the owner of the Ladbrokes and Coral betting brands, rose by 27% in early trading as the biggest riser on the blue-chip index, after the firm rejected an £8bn takeover bid, saying it significantly undervalued the business.

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Stock markets across Europe rallied as investors bet that a swift economic recovery will follow tougher government restrictions at the start of the year to contain rapid growth in Covid-19 infections. France’s Cac 40 index gained by 1.7% and Germany’s Dax 30 rose 1.2%.

Analysts said a lack of widespread disruption for cross-border trade following the end of the Brexit transition had also buoyed markets, after the UK and the EU agreed a last-minute deal before the 31 December deadline. Truck movements are, however, below normal for the time of year, after firms rushed to move goods before the transition expired.

Tougher government restrictions and rapid growth in coronavirus infections are however expected to hit the economy at the start of the year.

Hinesh Patel, a portfolio manager at the investment firm Quilter Investors, said the stock market gains were a reflection of investors “desperately hoping that this latest vaccine can be rolled out in rapid time”.

“Otherwise they may find themselves prematurely embracing the reopening of the economy.”

However, he added: “With Brexit risk appearing as if it is off the table and the start of the Oxford University/AstraZeneca vaccine rollout, many investors are taking the opportunity to catch up on some of the potential opportunities they may have missed prior to Christmas.”

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