The blue-chip FTSE 100 closed 1.3% higher, pushed up by heavyweight mining stocks Rio Tinto and BHP Group. The two will be the first among their peers to release quarterly production data later in the month.

A recent rise in metal prices, particularly copper, has also improved the prospects of major miners. [MET/L]

The mid-cap FTSE 250 added 1.2% for the day. While second-quarter earnings are broadly expected to paint a dismal picture, markets will be looking to corporate guidance on how a post-COVID-19 recovery will pan out.

Asian shares also began the week on an optimistic note, climbing toward five-month peaks even as some U.S. states reported record new COVID-19 cases.

"July and August are generally weaker months for markets, but this time they are being pushed higher on liquidity infusion, upbeat corporate earnings updates and positive news on the COVID-19 vaccine," said Keith Temperton, analyst at Lombard Forte.

The FTSE 100 has rebounded about 26% from its March lows on a raft of monetary and fiscal stimulus, but has struggled so far in July to extend its gains, owing to pressure from rising COVID-19 cases across the globe.

Rating agency Moody's warned on Friday that Britain will suffer the sharpest peak-to-trough economic slump of any major economy this year, while the health crisis will push up national debt as a share of GDP by nearly a quarter.

Brexit negotiations are also back in focus ahead of the Dec. 31 end of the transition period, when Britain will leave the EU's single market and customs union. Cabinet Minister Michael Gove flagged some progress was being made in talks.

Private security company G4S rose 9.3% after it said it could axe 1,150 jobs at its UK cash business as it grapples with an increased shift to digital payments triggered by Britain's coronavirus lockdown.

(Reporting by Shashank Nayar in Bengaluru with additional reporting by Sagarika Jaisinghani; Editing by Shounak Dasgupta and Mark Heinrich)

By Shashank Nayar and Ambar Warrick