The blue-chip FTSE 100 index rose 0.9%, with healthcare and financial stocks, mainly AstraZeneca Plc, GlaxoSmithKline and Prudential Plc leading gains.
Oil heavyweights BP and Royal Dutch Shell were also among the biggest gainers on the index as oil prices edged higher. [O/R]
The mid-cap index rose 0.1%.
"Delving into the data for Q4, it was better than we expected," said Craig Erlam, senior market analyst at OANDA Europe.
"So there is cause for optimism now, especially against the backdrop of a very promising vaccine rollout we are seeing in the UK."
Data showed Britain's GDP grew 1.0% between October and December, ensuring the economy did not head back towards recession at the end of 2020.
The Bank of England has forecast that the economy will shrink by 4% in the first three months of 2021 due to the new lockdown and Brexit-related disruption.
Vaccine optimism and a raft of global stimulus have lifted the FTSE 100 almost 34% from a virus-induced low in March 2020, but the index is still about 15% below the highest level of last year, while its Asian and U.S. peers have scaled record highs.
Office for National Statistics said prevalence of COVID-19 infections in England decreased in the week ended Feb. 6, equivalent to about one in 80 people.
Meanwhile, Junior Home Office Minister Victoria Atkins has said Britain will set out its roadmap for easing lockdown restrictions on Feb. 22.
Fuel retailer Vivo Energy rose 5.8% after forecasting full-year core earnings above the top end of a market estimate and announced a dividend for 2020.
Holiday company Jet2 fell 7.2% as it raised 422 million pounds ($582 million) through a new share issue, equivalent to 20% of its share capital prior to the fund raising.
(Reporting by Shivani Kumaresan in Bengaluru; editing by Uttaresh.V and Shailesh Kuber)
By Shivani Kumaresan