LONDON - ASIAN and European stock markets soared on Monday, lifted by a multi-billion-dollar economic stimulus package announced by China and a pre-weekend rally on Wall Street, traders said.

Shanghai closed up 7.27 per cent after the Chinese government announced at the weekend plans to spend four trillion yuan (S$872 billion) on projects by the end of 2010.

Elsewhere on Monday, Tokyo rocketed to close 5.81 per cent higher, Hong Kong gained 3.5 per cent and Sydney won 1.4 per cent.

In early European trade, London rallied 2.77 per cent, Paris jumped 3.10 per cent and Frankfurt climbed 2.83 per cent.

'A solid finish on Wall Street last week and the announcement of a stimulus package to sustain the Chinese economy have both combined to shore up stock markets as the new week's trading gets underway', said CMC Markets dealer Matt Buckland.

US stocks had rallied on Friday after two days of steep losses on recession fears, despite grim data showing October unemployment spiked to a 14-year high and hefty quarterly loss from General Motors and Ford.

The Dow Jones Industrial Average leapt 2.85 per cent, the tech-heavy Nasdaq rose 2.41 per cent and the broad Standard & Poor's 500 index gained 2.86 per cent.

However Gulf stock markets dropped for the second day running on Monday.

In the United Arab Emirates, the Dubai Financial Market sank 3.8 per cent to a four-year low as the real estate sector continued to suffer from fears of a severe correction.

China meanwhile unveiled a multi-trillion yuan economic stimulus plan on Sunday aimed at boosting domestic consumer demand in the face of flagging exports, as foreign markets contract in the global financial crisis.

The measures were approved at a cabinet meeting chaired by Premier Wen Jiabao on Wednesday, state media said, and would increase spending on infrastructure and a range of other sectors amid slowing domestic growth.

'Given the magnitude of the plan, this will likely have a significant impact in buffering the current (Chinese) deceleration', said Calyon analyst Sebastien Barbe.

'However, let's keep in mind that the global shock is quite strong and that the package is unlikely to reverse the Chinese economic deceleration - it will only slow its pace'.

Economic growth in the country eased to nine per cent in the third quarter of this year, the lowest in around five years, partly owing to slowing exports.

KUALA LUMPUR
Malaysian share prices rose 1.2 per cent on Monday in line with gains on regional markets which were heartened by China's stimulus package, dealers said.

The Kuala Lumpur Composite Index rose 10.29 points to close at 904.24.

'Sustained bargain-hunting by local government-led funds and value-hunting by retail players managed to help the index crack the 900 psychological resistance level', one dealer told Dow Jones Newswires.

'If there's follow-through buying, there?s a good chance the index will extend its rise and test 920 (on Tuesday),' he added.

Among the gainers, IOI rose 3.9 per cent to 3.24 ringgit (S$1.36), Gamuda jumped 9.4 per cent to 1.87 ringgit and gambling group Genting was 2.7 per cent stronger at 4.62 ringgit.

Declining stocks included TMI which lost 5.1 per cent to 4.44 ringgit, Maybank which slipped 1.8 per cent at 5.55 ringgit and Malaysia Airlines which lost 1.1 per cent to 2.80 ringgit.

HONG KONG
Hong Kong share prices closed 3.5 per cent higher on Monday, as a Chinese economic stimulus package and a pre-weekend rise on Wall Street pushed up markets across Asia, dealers said.

The benchmark Hang Seng Index closed up 501.2 points at 14,744.63. Turnover was 60.71 billion Hong Kong dollars (S$11.6 billion).

SHANGHAI
Chinese share prices closed up 7.27 per cent on Monday after the government announced a massive stimulus package to boost the domestic economy, dealers said.

Demand for construction-related shares rose after Beijing unveiled plans to spend four trillion yuan (S$873 billion) on projects by the end of 2010, traders said.

Meanwhile the government also said it would adopt expansionary fiscal policy and modestly relax its monetary policy to spur growth, opening the door for more measures and interest rate cuts.

'The government's move sparked investors' hopes for more aggressive monetary and fiscal actions, such as further interest rate cuts', Mr Wang Junqing, an analyst at Guosen Securities, told Dow Jones Newswires.

The benchmark Shanghai Composite Index, which covers A and B shares, closed up 127.09 points to 1,874.80 on turnover of 56.9 billion yuan .

TOKYO
Japan's Nikkei stock index soared 5.81 per cent by the close on Monday as investors welcomed a Wall Street rally on Friday, a weaker yen and a Chinese economic stimulus package.

The benchmark rose 498.43 points to 9,081.43, after the Dow Jones jumped 2.85 per cent as a spike in US unemployment raised expectations of fresh interest rate cuts by the Federal Reserve to boost the economy. -- AFP, THOMSON REUTERS