The index gained 1.2%, while the domestically focussed mid-cap FTSE 250, considered a barometer for Brexit sentiment, only edged up 0.2%.

"The FTSE 100's ascent continues, helped today by a reversal in the sterling strength... It is not hard to guess the cause of this change, as Brexit talks drag on without any sign of progress and the rhetoric from some European capitals becomes increasingly more strident," said Chris Beauchamp, chief market analyst at IG.

Brexit negotiations remained stuck with only weeks left for Britain's transition agreement to expire. A senior British minister said there was still a chance of a no-deal Brexit as talks had snagged on fishing, governance rules and dispute resolution.

The FTSE 100 had rallied more than 12% in November, marking its best month in 31 years, as major global drugmakers announced that their vaccine candidates were effective in preventing COVID-19, sparking hopes of a faster economic rebound next year.

Britain became the first country to approve Pfizer's COVID-19 vaccine, in the race to begin the most crucial mass inoculation programme in history with a shot tested in wide-scale clinical trials.

Coronavirus-related restrictions have hit business activity and weighed on UK stock markets in recent weeks.

In company news, security group G4S jumped 7.4% after Canada's GardaWorld raised its offer for the British company, valuing it at 3.68 billion pounds.

Stock Spirits Group surged 11.7% after posting a higher annual core profit and proposing a special dividend on Wednesday as people stuck at home due to COVID-19 chose its local brands.

(Reporting by Shivani Kumaresan and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta and Shailesh Kuber)

By Shreyashi Sanyal