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UPDATE 2-FTSE 100 leaps to five-month high on vaccine optimism

(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)

* Flutter, BAE Systems jump on raising profit forecast

* Workspace slips on first-half loss, dividend push back

* FTSE 100 up 1.4%, FTSE 250 adds 1.6% (Updates to close)

Nov 11 (Reuters) - London stocks jumped on Wednesday, logging nearly 8% gains this week, as optimism about an effective COVID-19 vaccine offset concerns over surging coronavirus cases and a deadlock in Brexit trade talks with the European Union.

The blue-chip FTSE 100 index closed up 1.4%, touching its highest level since June 10, with British Airways owner IAG rising 8% after Goldman Sachs upgraded the stock to ‘buy’.

A weaker sterling also boosted dollar earners such as AstraZeneca Plc, British American Tobacco Plc and Unilever Plc and HSBC Holdings Plc.

The domestically focused mid-cap FTSE 250 ended 1.6% higher, boosted by financial and real estate stocks.

“This week’s news on a vaccine, while welcome, does not change the fact that France, Germany and the UK are still in the middle of partial economic lockdowns,” Michael Hewson, chief market analyst at CMC Markets, wrote in a note.

“However, for now markets appear content to ignore this and are focusing on the potential green pastures of a post-pandemic world, with a workable vaccine.”

After falling nearly 5% in October, the FTSE 100 is up more than 14% this month, outperforming its U.S. and European peers as a slew of stimulus measures and positive vaccine data supported hopes of a sooner-than-expected economic recovery.

England’s Deputy Chief Medical Officer Jonathan Van-Tam said the country was ready to roll out a vaccine once regulators approved it as safe, as it grapples with more than 61,000 COVID-related deaths, Europe’s highest toll.

Brexit news also drew attention with Prime Minister Boris Johnson saying he was hopeful a trade deal with the EU could still be agreed, but that Brussels needed to understand Britain’s priorities.

Workspace Group slipped 2.5%, after it swung to a first-half loss and deferred a decision on full-year dividend.

Online betting group Flutter Entertainment and defence company BAE Systems Plc jumped 5% and 2.5% respectively, after they raised their annual earnings forecast. (Reporting by Devik Jain in Bengaluru; Editing by Bernard Orr, Anil D’Silva and Mark Heinrich)

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