Bond markets however had continued to strike a cautious tone with yield curves flattening.
Wednesday's news pushed British government bond yields lower as investors pared back their bets on a rate hike from the Bank of England. Bond yields move inversely with prices.
German yields, which often move in tandem with international peers, also dropped. The 10-year yield, the benchmark for the euro area, fell nearly 3 basis points to -0.409%, the lowest since early September.
Germany's 10-year inflation-linked bond yield dropped to a record low of -2.104%. The entire Dutch yield curve fell into negative territory for the first time since February as the country's 30-year yield dropped below 0%.
Much of the fall in yields reversed after BioNTech and Pfizer said a three-shot course of their COVID-19 vaccine was shown to generate a neutralising effect against the new Omicron variant in a laboratory test, sending stock markets back higher.
By 1202 GMT, Germany's 10-year yield was down less than 1 bp on the day to -0.38%.
Lyn Graham-Taylor, senior rates strategist at Rabobank, said that unlike Britain, several euro zone countries had already implemented restrictions to combat high infection rates before the Omicron variant was even known.
Britain announcing measures on the back of Omicron raises the question of whether they will need to take even more measures, he said.
Even after the recovery in German yields, the closely watched gap between Italian and German 10-year yields still remained wider on the day at 132 bps as Southern European bonds underperformed higher-rated peers. DE10IT10=RR
Graham-Taylor said that signalled that "the ECB is going to have to tread really carefully with regards to what it wants to do with its asset purchase programme".
Focus remained on European Central Bank speakers ahead of the bank's policy meeting next week, where it is expected to set policy for a relatively short period of time given heightened uncertainty.
Inflation in the bloc will take longer to fall back to target than earlier thought, but so far there is no evidence that high prices are becoming embedded in wages, Vice President Luis de Guindos said.
Other policymakers signalled that a new bond-buying programme is not needed after the bank's emergency bond purchases expire in March, or that an extension would require significant economic damage due to Omicron.
Attention was also on Germany, where Social Democrat Olaf Scholz officially takes over as Chancellor, bringing an end to Angela Merkel's 16-year leadership.
In the primary market, Germany raised 2.497 billion euros from the re-opening of a 10-year bond.
(Reporting by Yoruk Bahceli; Editing by Angus MacSwan and Jan Harvey) ((Yoruk.Bahceli@thomsonreuters.com; +44 20 7542 7571; Reuters Messaging: email@example.com))