Vaccine hopes propel London shares; Primark owner jumps

London shares rose on Thursday as signs of progress in developing a COVID-19 vaccine bolstered hopes of a post-pandemic economic recovery, while Primark-owner Associated British Foods jumped after issuing an upbeat trading update.

London shares rose on Thursday as signs of progress in developing a COVID-19 vaccine bolstered hopes of a post-pandemic economic recovery, while Primark-owner Associated British Foods jumped after issuing an upbeat trading update. The blue-chip FTSE 100 was up 0.9% and the mid-cap FTSE 250 1.0% as a COVID-19 vaccine from Pfizer and Germany's BioNTech was found to be well tolerated in early-stage human trials.

AB Foods surged 6.5% to its highest in nearly a month, as it said trading in the Primark fashion stores that had reopened from a coronavirus-led lockdown had been "reassuring and encouraging". "The recovery from the pandemic was never going to be easy for businesses, yet AB Foods' update would suggest it stands a good chance of bouncing back," said Russ Mould, investment director at AJ Bell.

Travel stocks added 2.5% as a report said the British government will end quarantine rules for those arriving from 75 countries so that people can go on holiday. The FTSE 100 has rebounded sharply since a coronavirus-driven crash in March, but is still down about 17% on the year with investors closely tracking reports of a resurgence in COVID-19 cases, which could lead to another shutdown.

"The risk now appears to be reversing previous action to ease lockdowns and go back to square zero. Any news of a vaccine being developed will only have a short-lived impact on markets until it becomes available to the entire population," said Hussein Sayed, market strategist at FXTM. Pressure is also mounting on the UK to agree to a free trade deal with the European Union before the end of the year, when a transition period expires.

Among individual movers, engineering company Meggitt jumped 8.1% even as it estimated a roughly 15% drop in first-half organic sales.

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