London shares rallied on the first trading day of 2021, driven by optimism over the rollout of the second coronavirus vaccine. The FTSE 100 index closed up 1.7% at 6,571.88, while the FTSE 250 rose 0.24%.
The main market was led by a surge in Entain, owner of Ladbrokes, which jumped 25% after a takeover bid from rival MGM Resorts. The pound also strengthened against the dollar, reaching $1.37 for the first time since May 2018.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the FTSE 100 had begun the year on the front foot amid optimism for global growth as vaccine rollouts gather pace. Dialysis patient Brian Pinker, 82, became the first person to receive the Oxford-AstraZeneca vaccine at Oxford's Churchill Hospital, with more than half a million doses ready for use in the UK on Monday.
Despite the gains, the FTSE 100 remains more than 10% below its level a year ago, and the UK economy is likely to have finished 2020 at least 10% smaller. Banks and homebuilders had a bad day amid concerns over further lockdowns and their impact on household finances.
Betting company Entain was the biggest riser after the $11bn takeover offer from MGM Resorts. Entain said the approach undervalues the company, leading to speculation of a higher bid. The move is the latest attempt by a casino operator to expand into online gambling.
