Page last updated at 21:06 GMT, Monday, 8 December 2008

Markets surge on stimulus hopes

Traders on the floor of the New York Stock Exchange
Wall Street took heart from plans for a huge government spending boost

US shares echoed gains in stock markets worldwide on hopes that new stimulus plans in the US and other countries will revive global economic growth.

The Dow Jones index ended Monday up 299 points or 3.5% to 8,932, shrugging off Friday's grim unemployment data. The Nasdaq and S&P's 500 also gained.

In the UK, the FTSE 100 ended up 6.2%, while Germany's Dax added 7.6%, and France's Cac finished up 8.7%.

Earlier in the day, stock markets around Asia also raced ahead.

An extraordinary, frightening responsibility is being placed on Obama

BBC business editor Robert Peston

"Despite bad US jobs data [announced on Friday], markets are gaining on a sense that they've hit the bottom and expectations for economic stimulus measures being put out by many governments," said Hiroake Osakabe at Chibagin Asset Management.

Other analysts were less optimistic that the rally would be sustainable while consumers and businesses were unable to access affordable bank loans.

"There's a chance we could be higher for the day, but I'd be very cautious about jumping in with both feet," said Scott Fullman, director of derivative investment strategies with WJB Capital.

Great expectations

Investors were cheered by plans outlined by US President-elect Barack Obama over the weekend for the biggest infrastructure investment since the creation of an interstate highway in the 1950s, which would create at least 2.5 million new jobs.

Hopes that Congress will soon pass legislation that will save the "big three" Detroit carmakers from collapse also helped to boost global markets.

The reversal of sentiment came after a dire session on Friday fuelled by data showing that US employers cut more than half a million jobs in November - the biggest monthly cut in 34 years.

BBC business editor Robert Peston said the stock market reaction was "largely emotional".

"An extraordinary, frightening responsibility is being placed on Obama," he said.

"At a time when most would say that globalisation has undermined the power of most elected politicians, there appears to be a widespread belief that one newly elected leader will have near-magical powers."

Separately, South Korea and India also unveiled measures to help firms and boost their economies and there is also talk that the Chinese government will take further action to spur economic growth.

Market moves

The UK's FTSE ended up 251 points to 4,300, while Germany's Dax closed ahead 334 points to 4,716.

France's Cac gained 259 points to 3,247.

Earlier, Korea's Kospi index ended 7.5% to a near four-week high, while Hong Kong's Hang Seng ended up almost 9%, and Japan's Nikkei added 5.2%.

Stock markets in India and mainland China also rose.

Mining and construction groups and firms that make machinery were the biggest gainers on hopes that they will benefit from increased investment in infrastructure projects.

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