The blue-chip FTSE 100 index closed up 1.8%, gaining 6.5% in two days, its best since March 26, with travel and leisure <.FTNMX5750>, energy <.FTNMX0530> and aero <.FTNMX2710> stocks among the biggest gainers.
After rising nearly 1.3% in afternoon trade, the domestically focussed mid-cap FTSE 250 index ended 0.9% higher, with Capita Plc jumping 26.9% after the outsourcer eked out a small rise in adjusted third-quarter core profit helped by cost-cutting.
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 new lockdowns spurred stockpiling.
"Certainly the unemployment picture is relatively bleak. However because of the vaccine, investors are feeling it's not going to last as long and that even though we may still face quite a bleak winter period, we can test whether or not it's effective in the mass vaccination program," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Brexit news was also in focus with finance minister Rishi Sunak saying significant progress have been made in a post-Brexit trade deal talks.
Croda International Plc jumped 7% after the specialty chemicals maker struck a additives supply deal with Pfizer Inc for manufacturing its COVID-19 vaccine candidate.
Premier Foods Plc shed 10% even after it lifted its full-year trading profit outlook, while motor insurer Direct Line Group Plc fell 2.2% on lower quarterly premiums because of weak car sales due to the pandemic.
Property firm Land Securities Group Plc rose 4% after it resumed dividend payouts even as its first-half losses soared to 835 million pounds.
(Reporting by Devik Jain in Bengaluru; editing by Uttaresh.V, Saumyadeb Chakrabarty and Jonathan Oatis)
By Devik Jain