Amid hefty gains in Europe and Asia, the Dow Jones industrial average was up 257.50 points at midday, or 3.0 per cent, at 8,892.92, while the broader Standard & Poor's 500 index was 25.99 points, or 3.0 per cent, higher at 902.06.

The FTSE 100 index of leading British shares closed up 250.69 points, or 6.2 per cent, at 4,300.06, while Germany's DAX was 334.41 points, or 7.6 per cent, higher at 4,715.88.

The CAC-40 in France rose 259.47 points, or 8.7 per cent, to 3,247.48.

Earlier, Hong Kong's Hang Seng index jumped 1,198.78 points, or 8.7 per cent, to 15,044.87 - its highest close in seven weeks - while Japan's Nikkei 225 average jumped 411.54 points, or 5.2 per cent, to 8,329.05.

Growth-promoting measures

The gains across the world came despite Friday's news that American employers cut 533,000 jobs in November - the most in 34 years - as investors appeared to signal their support for growth-promoting measures around the world.

Investors have been cheered by United States President-elect Barack Obama's plans, announced over the weekend, for the largest US public works spending programme since the creation of the interstate highway system a half-century ago.

"Equity markets have managed to put a remarkably positive spin on Friday's payrolls," said Julian Jessop, a senior analyst at Capital Economics. "The positive spin is that the payroll data are a wake-up call that guarantees an even larger fiscal stimulus in the New Year."

Positive sentiment was further stoked by reports that China will this week look at new steps to expand the US$586 billion of stimulus already planned and the announcement of additional spending plans in India after the central bank slashed its key interest rates by one percentage point.

Production expectations

Philip Shaw, economist at Investec Securities, thinks China's already-announced fiscal stimulus should stabilise the country's expansion at around eight per cent a year, which should also provide some support for the region.

"It should also keep global GDP growth positive, against a background where G7 output looks set for its first contraction since 1982," he added, referring to the Group of Seven industrialised countries.

Hopes that the global stimulus measures may limit the recession helped oil prices climb back from four year lows. Expectations of big production cuts from the OPEC oil cartel also pushed oil prices up.