London shares extend rally on vaccine optimism

The blue-chip FTSE 100 index was up 1.2%, with Rolls-Royce Holdings Plc surging 25.5% following a 44% jump on Monday after Pfizer announced that its coronavirus vaccine was 90% effective.

Shares of energy, insurance and auto companies were also among the biggest gainers in morning trading. The domestically focussed mid-cap FTSE 250 index added 0.6%.

“The market is currently split between investors who are optimistic about the vaccine and see a way out and those who still have doubts about it,” said Milan Cutkovic, market analyst at Axi.

“The UK market has been underperforming because it’s suffering through Brexit and the pandemic at the same time and the pressure on Boris Johnson is greater than ever now that the economy is in a deep recession.”

UK markets had started November on a strong footing, also aided by stimulus measures from the British government and the Bank of England.

Data on Tuesday, however, showed layoffs in Britain hit a record high during the third quarter, while surveys said consumer spending faded in October even as the re-introduction of lockdowns prompted a renewed stockpiling spree.

In company news, Premier Foods Plc fell 5.2% even after it raised its full-year trading profit outlook and said it expects higher demand for its brands due to the recent government restrictions on eating out.

J Sainsbury’s and WM Morrison Supermarkets Plc rose between 0.3% and 1.9%, while Tesco Plc dipped 0.2% after industry data showed British grocery sales increased by 9.3% in the 12 weeks to Nov. 1 as consumers in England prepared for another lockdown.

Motor insurer Direct Line Group Plc shed 3% after it posted lower premiums due to weak car sales in the face of COVID-19 crisis.

REUTERS