LONDON: London shares closed higher on Thursday as signs of progress in developing a Covid-19 vaccine bolstered hopes of a post-pandemic economic recovery, while Primark-owner Associated British Foods gained after issuing an upbeat trading update.

The blue-chip FTSE 100 rose 1.3% and the mid-cap FTSE 250 1% as a Covid-19 vaccine from Pfizer and Germany's BioNTech was found to be well tolerated in early-stage human trials.

Appetite for global equities heightened after data showed record employment growth in the United States at 4.8 million job additions, even as layoffs remained elevated and Covid-19 cases across the country spiked.

AB Foods rose 4.1% to its highest in nearly a month, as it said trading in the Primark fashion stores that had reopened from a coronavirus-led lockdown had been "reassuring and encouraging".

The FTSE 100 has rebounded sharply since a coronavirus-driven crash in March, but is still down about 17% on the year with investors closely tracking reports of a resurgence in Covid-19 cases, which could lead to another shutdown.

Travel stocks added 2% as a report said the British government will end quarantine rules for those arriving from 75 countries so that people can go on holiday.

Engineering company Meggitt jumped 6.2% after it said on Thursday there were initial signs of a recovery in airline industry demand after a difficult first half.

"The spike in Covid-19 cases could slow things down some going forward, but for now, the stock market only cares about one thing and that is the reopening," said by Ryan Detrick, senior market strategist at LPL Financial. Pressure is also mounting on the UK to agree to a free trade deal with the European Union before the end of the year, when a transition period expires.