The Footsie rallied 1.2 per cent, closing at 6463.39, while the FTSE 250 gained 0.2 per cent, to 19877.77
The FTSE 100 hit its highest level since June after the UK became the first country to approve Pfizer and Biontech’s Covid vaccine.
The jab will be rolled out from next week to pave the way for mass vaccination and could herald a return to ‘normal’ life by next summer.
Elderly people in care homes and care home staff are top of the priority list, followed by over-80s and healthcare staff.
Prime Minister Boris Johnson urged the public not to get ‘carried away with over-optimism or falling into the naive belief that our struggle is over’.
But the news buoyed share market UK, with the Footsie, which rallied 1.2 per cent, or 78.66 points, closing at 6463.39 – its highest close since early June, while the FTSE 250 rose 0.2 per cent, or 32.96 points, to 19877.77.
The blue-chip index was also nudged higher by a drop in the value of the pound as Brexit talks went to the wire, with sterling below $1.33 at its lowest point.
The Footsie tends to rally when the pound falls because it boosts the dollar-denominated earnings of overseas multinational companies listed on the index.
The vaccine news and the end of lockdown in England gave another boost to some of the firms hardest-hit by the pandemic.
Primark owner Associated British Foods rose 3 per cent, or 65p, to 2242p as queues formed around its shops, which reopened for the first time in a month. Primark does not have an online shop, unlike virtually all its competitors.
Pub group Mitchells and Butlers rose 4.6 per cent, or 10.5p, to 240.5p and Upper Crust-owner SSP Group which climbed 5.3 per cent, or 18.2p, to 360p, were also among the post-lockdown winners.
The move away from defensive stocks less affected by the pandemic bruised body armour, gas mask and military helmet maker Avon Rubber, despite its stellar results.
Shares slid 8.8 per cent, or 405p, to 4220p as it increased its dividend by 30 per cent. Profit before tax fell from £8.7million to £500,000.
Profit before tax was 27 per cent higher to £28million when stripping out figures from a business that made rubber kit to milk dairy cows, which it sold at the end of its financial year to September 30.
Homeserve, the owner of handyman website Checkatrade, closed 0.5 per cent lower, down 5p, to 1052p, after FTSE Russell confirmed it will be booted out of the top index at the next reshuffle, which comes into effect from December 21.
Pershing Square, which will replace Homeserve, also slid, falling 0.6 per cent, or 15p, to 2500p.
Takeover target Elementis (up 4.1 per cent, or 4.9p, to 124.8p) and shopping centre landlord Hammerson (up 0.2 per cent, or 0.05p, to 23.54p) will be making their way back onto the mid-cap index, as James Fisher (flat at 957p) and Scottish Investment Trust (up 1.5 per cent, or 11p, to 723p) bow out.
Elsewhere, it was a mixed day for travel stocks. Tui, the world’s largest holiday company, sank 5.9 per cent, or 29.9p, to 481.5p after it agreed a third bailout with the German government.
It secured a £1.6billion package on the condition that it suspends management bonuses and dividends.
Its largest shareholder, Russian billionaire Alexei Mordashov, will increase his stake from 25 per cent to 36 per cent if Berlin regulators allow him to without having to table a takeover offer. If not, he will hike his holding to 29.9 per cent.
Beleaguered cruise operator Carnival advanced 1.5 per cent, or 20p, to 1389p despite chairman Micky Arison selling more than £77million worth of shares.
And budget airlines Wizz Air and Ryanair were virtually unmoved by statistics showing they operated with just a fifth of their normal passenger numbers in November.
Wizz was flat at 4576p while Ryanair rose 0.1 per cent, or 0.01 cents, to €15.83.