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The UK stock market recorded its best week since April on the back of hopes that a vaccine breakthrough could soon begin to halt the pandemic.

Markets around the world have soared this week after Pfizer and BioNTech announced that early data indicated their Covid-19 vaccine was 90 per cent effective in preventing the disease while Russia reported that its Sputnik V vaccine is 92 per cent effective.

In London, early jitters saw the FTSE 100 fall on Friday morning but the index of leading shares erased its losses to end the session just 0.4 per cent down.

The strong performance of UK company shares came after official figures showed the UK economy grew by a record 15.5 per cent in the third quarter as restrictions were eased and people returned to workplaces and high streets. 

However, the bounce was not nearly enough to make up for the lost output earlier in the year with GDP remaining 9.7 per cent lower in the quarter than it was at the end of last year.  

Exuberance in the markets earlier in the week has been tempered by high numbers of coronavirus case numbers and deaths in the UK.

“After the vaccine-infused euphoria at the start of the week a dose of reality seems to have been administered to the market,” said AJ Bell investment director Russ Mould.

“Clearly the Covid-19 crisis is not at an end despite the positive news announced by Pfizer and counterparts in Russia.”

The pound gained against the dollar and euro after news that  Boris Johnson’s top aide  Dominic Cummings was set to leave, as talks over a trade deal with the EU go down to the wire.

Negotiations are set to resume on Monday after missing another deadline of mid-November, ahead of a potentially crucial meeting of European leaders next Thursday.

Analysts suggested the departure of Cummings – who drove the 2016 referendum campaign for Brexit and will leave his position in Downing Street at the end of the year – could lead to a less hardline approach in talks with Brussels.

Across the Atlantic, stocks were moderately higher in Friday late-morning trading, recovering some of the declines markets posted the day before as investors became increasingly worried about rising coronavirus infections and their impact on the U.S. and global economy.

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The S&P 500 rose 0.8 per cent per cent, with the Dow Jones Industrial Average rising 0.9 per cent and the Nasdaq composite up 0.5 per cent. The market was lifted by energy, real estate and companies that rely on consumer spending, while big technology companies gave up early gains and were now lower.

Additional reporting by agencies