European stock markets advanced on Monday amid takeover activity, Brexit relief, and vaccine-driven economic optimism on the first trading day of 2021.
London's FTSE 100 shares index gained 1.7 percent on the first day since Britain finalised a divorce from the European Union, as dealers noted no signs of the Brexit chaos some had feared.
Initial enthusiasm nonetheless eased during the day to produce more modest closing levels.
In the United States, the Dow Jones index fell by 2.0 percent in midday trading owing to profit-taking and uncertainty about Georgia Senate runoffs that could flip the chamber to Democratic control, traders said.
In London, the pound briefly reached 2.5-year peak at $1.3704 before pulling back to $1.3584.
It gave up around 1.0 percent against the euro to 90.27 pence.
"The latest lockdowns have dampened investor enthusiasm towards the pound, especially as PM Boris Johnson has warned of 'tougher' new measures to control COVID surge across the UK," ThinkMarkets analyst Fawad Razaqzada remarked.
Scotland on Monday announced a nationwide lockdown for the rest of January.
Oil prices fell ahead of a virtual meeting between OPEC and its allies to decide February output levels after coronavirus ravaged demand in 2020.
Bitcoin retreated to $31,340, a day after surging to an all-time high near $35,000.
'Hard not to like equities'
"It is hard not to like equities as the economic outlook seems to be inching towards pre-pandemic life," commented Oanda analyst Edward Moya as he surveyed European markets.
Investors are hopeful that Covid-19 vaccines — a first British patient who received the Oxford University/AstraZeneca jab — will help offset surging infections and herald a return to normality.
"Markets are being helped by the Oxford-AstraZeneca story as there is a growing feeling that the pharma sector is in a better position to tackle the health crisis," said CMC Markets analyst David Madden.
M&A in focus
European stocks were also propelled by merger and acquisition activity.
British betting company Entain, which owns high street chain Ladbrokes, revealed it had turned down a takeover offer worth £8.0 billion ($10.9 billion, 8.9 billion euros) from US casino giant MGM.
The news sent Entain's share price soaring by more than 25 percent to 1,420 pence, topping the FTSE 100 risers board.
In Paris, shareholders in French automaker PSA almost unanimously approved a merger with US-Italian group Fiat Chrysler, a deal that will create the world's fourth-largest carmaker by volume.
PSA shares won 1.7 percent to 22.75 euros in Paris, while Fiat shares added 1.5 percent to 14.88 euros in Milan.
Key figures around 1700 GMT
London – FTSE 100: UP 1.7 percent at 6,571.88 points (close)
Frankfurt – DAX 30: UP less than 0.1 percent at 13,726.74 (close)
Paris – CAC 40: UP 0.7 percent at 5,588.96 (close)
EURO STOXX 50: UP 0.3 percent at 3,564.39
New York – Dow: DOWN 2.0 percent at 29,983.94
Tokyo – Nikkei 225: DOWN 0.7 percent at 27,258.38 (close)
Hong Kong – Hang Seng: UP 0.9 percent at 27,472.81 (close)
Shanghai – Composite: UP 0.9 percent at 3,502.96 (close)
Pound/dollar: DOWN at $1.3584 from $1.3672 at 2200 GMT
Euro/pound: UP at 90.27 pence from 89.34 pence
Euro/dollar: UP at $1.2269 from $1.2215
Dollar/yen: DOWN at 103.14 yen from 103.20 yen
West Texas Intermediate: DOWN 2.0 percent at $47.53 per barrel
Brent North Sea crude: DOWN 1.5 percent at $51.01