Drugs firm Pfizer's own shares leapt 14% after it said that preliminary analysis indicated that its coronavirus vaccine was 90% effective.
Markets, already buoyed in response to a clear end to the US election, piled on gains.
But while airlines, hotels and others hit hardest by the pandemic soared, companies benefitting from it dived.
The UK's FTSE 100 share index was up more than 5% in afternoon trade, with similar gains seen on other European indexes.
Travel firms - which have been hit hardest by the pandemic - saw the biggest gains, with British Airways owner IAG soaring 35%.
Elsewhere in the sector, EasyJet shares rose 31% while aero-engine maker Rolls-Royce surged 45%.
Another sector of the economy that has been hit hard by coronavirus is hospitality, and catering firm Compass Group saw its shares rise more than 40%.
The trend towards online shopping accelerated during the pandemic. But with hopes of a successful vaccine, shares in grocery delivery firm Ocado dropped more than 9% while takeaway ordering firm Just Eat fell more than 7%.
Drugmakers have been racing to be the first to develop a successful coronavirus vaccine.
If authorised, the number of doses will be limited initially. Many questions also remain, including how long the vaccine will provide protection.
Optimism 'exceedingly high'
Stock markets had already been rallying in response Saturday's declaration that Joe Biden had won the race to become the next US president.
The Pfizer announcement then pushed market optimism "exceedingly high", but it "could fade" said Markets.com chief market analyst Neil Wilson.
"We should not be jumping any guns here, but ultimately a vaccine that works effectively would be good for the economy and favours the cyclical parts of the market that we thought were going to struggle," he said.
"It's clear the market is forward looking and pricing in recovery in a number of beaten-down areas next year," he said.
Richard Hunter, head of markets at Interactive Investor, said: "The Pfizer announcement is not yet a panacea, but adds to investor sentiment which had already been buoyed by the Biden victory, and has sent markets to strongly positive levels."
He noted that airline and related stocks had been rising rapidly, while "housebuilders, banks and retailers are all in the boat currently being lifted by a rising tide."
"It is still early days, and the practicalities point to any meaningful distribution not being available until the first few months of next year," he added.
"Even so, the news is without question a positive development and has certainly captured the imagination of investors."
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November 09, 2020 at 09:11PM
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Covid-19: Global share markets rocket on vaccine breakthrough - BBC News
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