The blue-chip FTSE 100 index closed up 4.7%, logging its best day since March 24, while the domestically focused mid-cap FTSE 250 soared 5.2% to a more than eight-month high.
Travel <.FTNMX5750> and oil <.FTNMX0530> stocks surged 12.3% and 13.2%, respectively, after U.S. drugmaker Pfizer and German partner BioNTech said their experimental COVID-19 vaccine was more than 90% effective based on initial trial results.
"Today's news is basically just 100% good news and there's not much room for subjectivity or debate, or all glass half empty kind of analysis," said Stefan Koopman, senior market economist at Rabobank.
"The markets are betting that life will return to normal sooner rather than later as there are new pathways out of this crisis, and the market is exuberant to hear this."
UK markets started November on a stronger footing as the British government and the Bank of England ramped up stimulus measures to support an economy facing a second nationwide coronavirus-induced lockdown.
Brexit news was also in focus, with the European Union saying it was redoubling its efforts to reach a trade deal with Britain this week.
Banks <.FTNMX8350>, which are considered a barometer for economic growth, added 12.2%.
Homebuilder Taylor Wimpey Plc surged 18.6% after it forecast annual results above market expectations, while real estate agent Countrywide Plc advanced 41.4% following an early-stage buyout approach from property firm Connells Ltd.
Shares of aero-engine maker Rolls-Royce ended nearly 44% higher, having earlier gained as much as 97%, while stay-at-home winners such as Reckitt Benckiser, Just Eat Takeaway.com and Ocado Group Plc tumbled between 5.8% and 11.5%.
(Reporting by Devik Jain in Bengaluru; Editing by Rashmi Aich, Aditya Soni)
By Devik Jain