(Sharecast News) - London stocks rallied in early trade on Monday, kicking off the new year in style amid optimism over the latest Covid vaccine rollout, while deal news also provided a boost.
At 0900 GMT, the FTSE 100 was 2.2% higher at 6,603.23 despite worries about another national lockdown, while sterling was up 0.1% against the dollar at 1.3690.
Spreadex analyst Connor Campbell said: "Determined to make the New Year better than the last, the European indices opened the first trading day of 2021 with much fanfare this Monday.
"Despite the rapid increase in daily Covid-19 case numbers and the impending need for a new national lockdown - be it immediately, as urged by Keir Starmer, or in a couple of weeks, as suggested by Boris Johnson - the FTSE was the most bombastic of the major indices after the bell.
"Part of that will be overcompensation. Even with the Christmas Eve Brexit trade deal, the Covid situation in the UK prevented the FTSE from reaching the same all-time highs struck by the DAX and Dow Jones in the closing stages of 2020."
Campbell attributed the gains to the rollout of the Oxford/AstraZeneca vaccine in the UK and "the continuation of 2021's great hope for ending the coronavirus pandemic".
"It is another step on the journey back to normality, and investors have seized upon it with all their might," he said.
Investors were also digesting the latest data out of China, which showed the manufacturing industry expanded at its slowest pace in three months in December as rising costs put pressure on hiring of workers.
The Caixin/Markit manufacturing purchasing managers' index dipped to 53.0 from 54.9, missing a consensus forecast of 54.8 compiled by Reuters. The reading was well above 50, which separates expansion and contraction.
Slower production weighed on the index, partly due to weaker growth in export sales. China's huge manufacturing sector has recovered strongly from the Covid-19 crisis supported by strong exports but renewed restrictions in many export markets could hit demand for Chinese-made goods.
On home shores, Markit's manufacturing PMI for December is due at 0930 GMT.
In corporate news, Entain surged after the Labdrokes owner rejected a proposed offer from its US partner MGM Resorts International valuing it at about £8.1bn. Entain said it had told MGMRI the proposal "significantly undervalues" the company. It has also asked for more information about the strategic rationale for combining the companies.
Neil Wilson, chief market analyst at Markets.com, said: "The market thinks MGM (or another) will be good for more. We knew the opening up of the US gaming market would be good news for UK firms with interests there and so it is proving. And it should be said the yanks would certainly prefer the Brits to stay off their turf.
"We should also note that good global businesses trading with a UK-listed discount to the share price remain attractive to foreign groups hungry for growth. Clarity around Brexit at long last may see more bids of this nature emerge."
Precious metals miners were on the rise as gold prices shone, with Fresnillo, Polymetal, Hochschild and Centamin all higher.
Miners also gained, with Anglo, Glencore, BHP and Rio all up.
On the downside, banks and housebuilders lost ground, while Rolls-Royce fell after the Financial Times reported that the engine maker will be putting its UltraFan engine programme "on ice" when testing finishes in 2022.
Market Movers
FTSE 100 (UKX) 6,603.23 2.21%
FTSE 250 (MCX) 20,750.67 1.28%
techMARK (TASX) 4,146.29 2.12%
FTSE 100 - Risers
Entain (ENT) 1,435.50p 26.64%
Fresnillo (FRES) 1,207.00p 6.86%
Polymetal International (POLY) 1,777.00p 5.49%
Anglo American (AAL) 2,533.50p 4.50%
Glencore (GLEN) 242.45p 4.06%
BHP Group (BHP) 2,002.00p 4.00%
Aveva Group (AVV) 3,330.00p 4.00%
Rio Tinto (RIO) 5,680.00p 3.84%
CRH (CRH) 3,170.00p 3.66%
Experian (EXPN) 2,877.00p 3.60%
FTSE 100 - Fallers
NATWEST GROUP PLC ORD 100P (NWG) 162.70p -2.95%
JD Sports Fashion (JD.) 839.20p -2.42%
Taylor Wimpey (TW.) 162.10p -2.23%
Lloyds Banking Group (LLOY) 35.84p -1.65%
Rolls-Royce Holdings (RR.) 109.65p -1.44%
Barclays (BARC) 144.86p -1.24%
Barratt Developments (BDEV) 662.40p -1.13%
Standard Chartered (STAN) 463.10p -0.60%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,216.00p -0.53%
Ocado Group (OCDO) 2,281.00p -0.26%
FTSE 250 - Risers
TUI AG Reg Shs (DI) (TUI) 489.50p 6.78%
Hochschild Mining (HOC) 219.20p 5.49%
Future (FUTR) 1,808.00p 4.03%
Homeserve (HSV) 1,065.00p 3.90%
Playtech (PTEC) 416.00p 3.66%
Centamin (DI) (CEY) 128.10p 3.56%
Micro Focus International (MCRO) 438.70p 3.44%
Pets at Home Group (PETS) 428.80p 3.03%
Gamesys Group (GYS) 1,174.00p 2.98%
Dechra Pharmaceuticals (DPH) 3,552.00p 2.96%
FTSE 250 - Fallers
Babcock International Group (BAB) 271.90p -2.86%
C&C Group (CCR) 221.00p -2.86%
Crest Nicholson Holdings (CRST) 318.20p -2.33%
Paragon Banking Group (PAG) 477.80p -2.21%
TP ICAP (TCAP) 234.00p -1.76%
easyJet (EZJ) 815.60p -1.73%
Redrow (RDW) 562.50p -1.57%
Vistry Group (VTY) 925.00p -1.54%
Sabre Insurance Group (SBRE) 272.50p -1.45%
Shaftesbury (SHB) 561.00p -1.41%