Global stock markets rocketed after Pfizer said its experimental vaccine was 90 per cent effective in preventing Covid-19, with the biggest US markets hitting new highs and European indices seeing their best session since March.
The Dow Jones and S&P 500 both opened at all-time highs as traders across the Atlantic saw already positive sentiment, following Biden's election win, turn into outright jubilation.
Europe's main markets had already been reporting their strongest daily performances for almost eight months before the US opening.
Travel, leisure and retail stocks were among the winners in London, with aerospace engineers Rolls-Royce soaring by 43.7% and British Airways-owner IAG leaping 25.5%.
It was a tougher session for Ocado and Just Eat Takeaway investors as the vaccine update brought up questions over how long the companies' boom in demand will last.
The FTSE 100 closed 276.27 points higher at 6,186.29 at the end of trading on Monday.
David Madden, market analyst at CMC Markets, said: "The Covid-19 crisis is far from resolved, but with the way that some traders have been reacting, one could think the pandemic has been put to bed.
"Markets tend to overreact to the downside and to the upside – which is what we are seeing today."
Europe's other major markets also surged higher, with French traders particularly positive that the vaccine could help its recovery amid its second national lockdown.
The German Dax increased by 4.94%, while the French Cac moved 7.57% higher.
In the US, all major markets rallied, with the update from Pfizer overshadowing positivity surrounding the election, stimulus plans and rebounding GDP updates.
Nevertheless, some firms plunged into the red, with Zoom, one of the days big losers as its shares slid 15%.
Meanwhile, sterling dipped as bargain hunters jumped on the US dollar to buy into the greenback, although most traders were focused on stocks through the session.
The pound fell by 0.16% versus the US dollar at 1.314 but was up 0.47% against the euro at 1.112.
In company news, Taylor Wimpey shares jumped after it said the housing market is recovering faster than initially thought as house buyers benefit from the stamp duty holiday and other Government incentives.
Shares closed 22.95p higher at 146.25p after the firm raised its profit expectations for the year.
Countrywide leapt higher after estate agent rival Connell's fielded an £82 million takeover deal. It closed 60p higher at 205p following the offer.
Elsewhere, funeral services firm Dignity closed 46p higher at 601p despite warning the high number of deaths due to Covid-19 this year could slow down its business in the next two years.
The price of oil rose on the back of hopes that progress on the vaccine will accelerate a recovery in the travel sector and spur demand for the energy stock.
The price of a barrel of Brent crude oil increased by 0.28% to $42.58.
The FTSE 100's biggest risers of the day were Rolls-Royce, up 30.44p at 100p; IAG, up 26.4p at 130p; Informa, up 101.3p at 558p; and British Land, up 81.6p at 454p.
The biggest fallers of the day were Fresnillo, down 201p at 1,109p; Polymetal, down 224.5p at 1,659p; Ocado, down 297p at 2,283p; and B&M, down 52.6p at 482p.
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