The prospect of renewed COVID-19 lockdowns has dented a rally for the FTSE 100 on the first day of trading this year.
London's leading share index was up by as much as 3% in early deals on Monday, pulled higher by commodity giants such as Fresnillo and Glencore, which tend to track global economic sentiment.
The biggest riser was Ladbrokes owner Entain, climbing more than 20% after it confirmed a takeover offer by US casino giant MGM Resorts.
Markets were reopening for the first time in the new Brexit era after a last-minute deal between London and Brussels eased fears of a chaotic departure.
Vaccine roll-outs were also credited for the early optimism.
However, the FTSE 100 ended the day 111 points, or 1.7% higher, at 6,571 - losing ground late in the session when it was confirmed that Scotland was to go into a new lockdown and Boris Johnson was to announce "further steps" to combat the virus in England - later revealed as a full lockdown.
The domestically-focused FTSE 250 was up just 0.2% by the close after a strong start to the day.
Virus worries weighed on values globally with the Dow Jones Industrial Average in New York falling almost 2%.
The pound had a strong start, climbing above $1.37 for the first time since May 2018 - versus a weakening US dollar but later slipped back below $1.36 as the greenback regained momentum.
It also lost more than a cent against the euro to trade below €1.11.
Market analysts pointed to lockdown concerns outweighing a Brexit relief rally for the UK currency.
The FTSE 100 started 2021 with a bang," noted Russ Mould, investment director at AJ Bell, pointing to the impact of the start of the AstraZeneca vaccine roll-out and the Entain offer.
"For now investors clearly believe the vaccine will provide the catalyst for a big recovery, perhaps after a tough first quarter, but getting enough of the population inoculated will be a big logistical challenge," Mr Mould said.
Markets also appeared to be counting on governments and central banks to keep supporting global economies even if the pandemic continues to hold businesses back.
Mark Haefele, chief investment officer at UBS Global Wealth Management, said: "We continue to believe that equities have further room to rise in 2021 as monetary and fiscal stimulus measures provide a tailwind, and we anticipate significant earnings growth as the global economy recovers."
The FTSE 100's start-of-year rally comes after it clocked up its worst annual fall since 2008 last year, lagging Wall Street indices that were pulled higher by the strength of tech stocks.
Monday's rally, however, saw the commodities-heavy London index outperform European counterparts, with an upturn for the oil price lifting the likes of BP and Shell to add to the surge in mining stocks.
https://news.google.com/__i/rss/rd/articles/CBMiVWh0dHBzOi8vbmV3cy5za3kuY29tL3N0b3J5L2Z0c2UtMTAwLXJhbGxpZXMtYXMtdmFjY2luZS1ob3Blcy1ib29zdC1zZW50aW1lbnQtMTIxNzkwNDbSAVlodHRwczovL25ld3Muc2t5LmNvbS9zdG9yeS9hbXAvZnRzZS0xMDAtcmFsbGllcy1hcy12YWNjaW5lLWhvcGVzLWJvb3N0LXNlbnRpbWVudC0xMjE3OTA0Ng?oc=5
2021-01-04 20:15:00Z
CBMiVWh0dHBzOi8vbmV3cy5za3kuY29tL3N0b3J5L2Z0c2UtMTAwLXJhbGxpZXMtYXMtdmFjY2luZS1ob3Blcy1ib29zdC1zZW50aW1lbnQtMTIxNzkwNDbSAVlodHRwczovL25ld3Muc2t5LmNvbS9zdG9yeS9hbXAvZnRzZS0xMDAtcmFsbGllcy1hcy12YWNjaW5lLWhvcGVzLWJvb3N0LXNlbnRpbWVudC0xMjE3OTA0Ng
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