Shares in London closed at their highest level in almost 10 months amid relief among investors that the UK and the EU had secured an 11th-hour trade deal. With the City open for business for the first time since the accord was agreed late on Christmas Eve, traders shrugged off a surge in the number of new Covid-19 cases and welcomed the avoidance of a no-deal Brexit. The FTSE 100 rose by 1.5% to close 100.5 points higher at 6,602 – its highest level since early March, when the stock market was sliding in the first wave of the pandemic. Shares in multinational companies and those that rely heavily on imports were among the big risers, but bank shares fell on disappointment that the UK-EU trade deal would make life more difficult for the financial services sector. Having been 2.5% up in early trading, the FTSE 100 rally lost momentum as the day wore on, failing to get a boost from shares on Wall Street hitting new record levels when business began in New York. The US market was boosted by hopes that the latest stimulus package agreed by Donald Trump and Congress will lead to a speedier recovery in the world’s biggest economy next year. Richard Carter, head of fixed income research at Quilter Cheviot, said investors were relieved that a disorderly no-deal Brexit had been avoided. “After four-and-a-half years of Brexit back and forth, the news of a Christmas trade deal between the EU and UK has been understandably welcomed by investors. Markets were particularly concerned about a damaging no-deal outcome but the agreement means we can look forward to 2021 with a measure of optimism. UK stock markets have so far reacted positively and should be in a better position to attract flows from international investors as the fog of uncertainty clears.” The FTSE 250 – which includes more UK-focused businesses – jumped 1.7% to close at its highest level since late February. Russ Mould, investment director at AJ Bell, said the markets seemed to be “welcoming the Brexit deal”. He warned, however, that the rally might be short-lived. “The agreement struck between London and Brussels is yet to win universal acclaim, even if that is the inevitable result of the compromises that the prime minister had to make to get the deal over the line before the end of the transition period and confirmation of the UK’s departure from the economic bloc,” Mould said. “A double-dip recession, thanks to new viral strains and perhaps more stringent lockdowns, could put equity investors on the back foot.”