FTSE 100 edges higher after UK approves AstraZeneca's COVID-19 vaccine

London's FTSE 100 inched higher on Wednesday after Britain approved a coronavirus vaccine developed by AstraZeneca and Oxford University, though surging COVID-19 cases in the country kept investors cautious.

The blue-chip FTSE 100 rose just 0.1%, trading below a fresh 10-month high hit in the previous session.

Financial stocks, mainly banks such as HSBC Holdings , Barclays and Lloyds Banking Group, were the biggest gainers on the index.

Drugmaker AstraZeneca gained 1%, also boosting the index, after the company said it was working with the government to begin vaccinations early next year.

"The AstraZeneca approval will be a game changer for the vaccination process as it is available immediately in quantity and is easily transported and stored," said Jeffrey Halley, a senior market analyst at OANDA.

"The announcement should be a strong positive factor for UK equities and the pound."

The regulatory approval is a welcome boost for AstraZeneca and the Oxford team, which has been accused of lack of clarity about the results from late-stage trials.

Britain is struggling to contain the coronavirus pandemic, with the country recording one of the world's highest death tolls of around 65,000 by mid-December, while the emergence of a more infectious virus variant has compounded its problems.

The mid-cap FTSE 250 index, considered a barometer of Brexit sentiment, rose 0.1%, ahead of a vote by British lawmakers on the UK-EU trade deal later in the day.

"Gains in equities are likely be capped until we see how the mechanics of Brexit unfold next week," Halley said.

In a positive turn for the economy, British house prices rose faster than expected in December to record their biggest annual increase in six years, mortgage lender Nationwide said.