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UK shares gain on vaccine hopes; Ladbrokes owner soars

By Shashank Nayar and Shivani Kumaresan

(Reuters) - British shares closed higher on Monday in the first trading session of the new year, buoyed by optimism around vaccine rollouts, while a jump in metal prices helped boost the export-heavy FTSE 100 index.

The blue-chip index rose 1.7% on its first day of trading with Britain outside the European Union's orbit, with shares of Entain the top gainer.

The Ladbrokes owner surged 25.3% to an all-time high after saying it received proposals from U.S. casino operator MGM Resorts for a possible offer.

"We are seeing optimism on the first day trading on the back of a very positive month of December in which a collection of major risk events such as the Brexit deal and vaccine approval went in the right direction," said Craig Erlam, senior market analyst at OANDA.

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Mining shares and consumer stocks were among the top gainers, with Rio Tinto giving the biggest boost to the index. Unilever and Reckitt Benckiser Group advanced between 1.5% and 3.6%.

The mid-cap index jumped 0.2%.

However, limiting gains was Prime Minister Boris Johnson's warning that tougher lockdown restrictions were probably on the way as COVID-19 cases keep rising.

"The near-term risks from this ferocious wave of COVID that we are seeing may be a drag on sentiment in near term," Erlam said.

Analysts at Deutsche Bank say markets would now be closely watching any issues with COVID-19 or the vaccine rollout, given that the new coronavirus variants, found in the UK and South Africa, have been detected in several other countries.

Drugmaker AstraZeneca jumped 1.3% after Britain became the first country to roll out its low-cost and easily transportable COVID-19 vaccine, the second vaccine candidate to be distributed.

(Reporting by Shashank Nayar and Shivani Kumaresan in Bengaluru; Editing by Uttaresh.V and Matthew Lewis)