London's FTSE-100 index of leading shares ended its first trading day of the year a good step higher than it signed off in 2020, as AstraZeneca's new vaccine started rolling out in the UK.
The FTSE-100 was led higher by Ladbrokes owner Entain, after it rejected a bid from a US rival. The index closed at 6,571.88 points, a 111.36-point or 1.7 per cent rise.
The index had been riding high after the first patients in the UK started receiving a second vaccine, this one developed by AstraZeneca and Oxford University.
But the close represented a retreat from the index's big highs earlier in the day. The FTSE-100 had recorded an intra-day high of 6,662 points.
The market started to retreat shortly after Downing Street announced Prime Minister Boris Johnson planned to make a televised address later in the evening to outline the next steps to tackle Covid-19.
It was the first day that post-Brexit trading arrangements came into force, meaning US banks wanting to buy European stocks would no longer go through London.
Belinda Keheyan, the head of marketing at trading platform Aquis Exchange, said the company had seen all of its European equities trading transfer seamlessly from London to Paris.
"It's been a pretty momentous day that overnight all European trading has just gone from London, it's virtually 100%," she told the PA news agency, adding she had heard of no glitches whatsoever as years of preparation paid off.
A spokesperson for the London Stock Exchange's pan-European share trading platform Turquoise said it had seen "positive volumes on both Turquoise and Turquoise Europe on 4 January".
Markets had also opened sharply down in the US shortly before the retreat started across Europe.
Traders across the pond are fixating on Tuesday's senate run-off elections. The two races in Georgia could mean that the Democrats have control over both Houses of Congress and the White House. Victory in both would mean that Republicans and Democrats are split 50-50 in the Senate, with the tie-breaking vote going to vice-president Kamala Harris.
"Bucking Europe's vaccine-led optimism, the Dow Jones dropped half a per cent, retreating from what would have been a fresh all-time peak," said Spreadex analyst Connor Campbell.
"It is understandably nervy – tomorrow sees the run-off Senate races in Georgia, a pair of votes just as important as the nationwide election due to the impact the results will have on who runs Congress's upper chamber."
The Dow Jones was trading down about 1.7% around closing time in London, while the S&P 500 had dropped 1.5%.
At the same time, sterling was down 0.6% and 0.8% against the greenback and single currency at $1.3576 and €1.107 respectively.
The CAC-40 in Paris ended the day up 0.7%, while the Frankfurt Dax rose less than 0.1%, falling back from earlier highs.
In company news, Entain led the way for all of the FTSE's companies, ending the day up more than a quarter, after it rejected an £8.1 billion bid from US casino company MGM Resorts.
Ferguson closed the day flat after agreeing to sell its UK business Wolseley for £308 million, ending plans to list the unit separately.
S4Capital bought integrated agencies Decoded and Metric Theory, and its shares closed up 0.4%.
The biggest risers on the FTSE-100 were Entain, up 286.5p to 1420p, Fresnillo, up 119.5p to 1249p, Polymetal, up 157p to 1841.5p, Anglo American, up 147.5p to 2572p, and BHP Group, up 110p to 2035p.
The biggest fallers on the FTSE-100 were Rolls-Royce, down 8.05p to 103.2p, IAG, down 9.95p to 149.85p, JD Sports, down 45.6p to 814.4p, NatWest, down 8.85p to 158.8p, and Taylor Wimpey, down 8p to 157.8p.
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