Asian stock markets leap higher on China stimulus plan

HONG KONG -- Asian stock markets gained strongly Monday, with Shanghai's index spiking more than 7%, as investors welcomed China's $586 billion stimulus plan aimed at countering the effects of a global slowdown on its economy. European markets opened higher.

Tokyo's Nikkei 225 stock average surged 498.43 points, or 5.8%, to 9,081.43, buoyed also by a weakening yen. Hong Kong's Hang Seng Index gained 501.20 points, or 3.5%, to 14,744.63, though traded well off its highs.

In mainland China, where the benchmark Shanghai Composite Index has fallen by more than two-thirds since peaking last October, the index soared 7.3% to 1,874.80. Markets in India, Australia, Singapore and South Korea joined the region's advance.

On Sunday, China unveiled a massive $586 billion stimulus package in hopes of keeping economic growth from falling too fast. Demand from the U.S. and the country's other vital export markets has been waning as the global financial crisis takes an economic toll.

China's economic growth slowed to 9% in the third quarter, the lowest level in five years and a sharp decline from 11.9% the year before — perilously low for a government that needs to create jobs for millions of new workers and for other Asian countries that have come to depend heavily on Chinese demand.

"The global economy is in trouble and Chinese authorities understand that they can't wait anymore ... They're aware that exports next year will be terrible given the weakening economies in the U.S. and Europe," said Winson Fong, a Hong Kong-based managing director at SG Asset Management, which oversees about $3 billion in equities in Asia.

"This has been overdue," he said. "Investors in mainland China have been waiting for a complete rescue package since the beginning of the year."

China's announcement came as economic officials from 20 leading nations called Sunday for increased government spending to boost the troubled global economy.

At a meeting in Brazil, finance ministers and central bank presidents from the Group of 20, which includes major wealthy and developing nations, also said emerging economies deserve a prominent role in talks to overhaul the world financial system.