Pfizer Inc said it could file for U.S. authorisation of the COVID-19 vaccine it is developing with German partner BioNTech as early as November.
The news powered global stock markets and helped lift the pan-European STOXX 600 by 1.3% in its best session in nearly three weeks.
The benchmark stock index nevertheless ended Friday with its first weekly decline in three as a resurgence in coronavirus cases across Europe stoked fears about more sweeping lockdowns. London and Paris, Europe's two richest cities, are again living under the shadow of state-imposed restrictions.
"This raises the very real fear that what is a stop-gap measure actually turns out to be something slightly longer term, which could see the collapse of hundreds of businesses," said Michael Hewson, market analyst at CMC Markets UK.
The new restrictions could also stifle business activity, derail a nascent economic rebound and further pressure European stock markets, which have lagged a recovery in their U.S. peers. While the S&P 500 has gained about 8% this year, the European STOXX 600 is still down nearly 12%.
Adding to investor uncertainty, British Prime Minister Boris Johnson said on Friday it was time to prepare for a no-trade deal Brexit unless the European Union fundamentally changed course in trade talks.
London's FTSE 100 still rose 1.5% as analysts said the majority of market participants expected a deal to be reached.
In company news, Thyssenkrupp surged 10.8% as Liberty Steel, founded by commodities tycoon Sanjeev Gupta, said it had made a non-binding offer for the company's steel unit.
LVMH jumped 7.3% as recovering sales of Louis Vuitton handbags helped it contain the fallout from the coronavirus crisis in the third quarter.
Shares of other luxury goods makers including Moncler and Burberry rose more than 3%.
Telecoms and real estate <.SX86P> were the only two European sectors to end lower on the day.
German shares rose 1.6%, clawing back more than half their losses from the previous session, with Daimler surging 5.5% after the luxury carmaker posted forecast-beating third-quarter results.
A 3.3% rise for Volvo after stronger-than-expected results also helped power the European autos index to its best session since Sept. 28.
(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Arun Koyyur and Catherine Evans)
By Sagarika Jaisinghani