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Shanghai - Chinese stocks soared on Monday after the government announced a $586bn spending package aimed at fending off the impact of the global economic slowdown.
The benchmark Shanghai Composite Index surged 7.3% to 1 874.80. The Shenzhen Composite Index of China's smaller, second market gained 6.5% to 497.56.
Property, steel and financial shares were among the biggest gainers, although energy firms also advanced, with market heavyweight PetroChina adding 6.7% to 11.22 yuan.
Chinese investors had been waiting months for a major spending package, and Beijing had hinted it was likely to deliver one soon.
"You can imagine how excited investors are after seeing their long-term expectations become reality," said Gao Lingzhi, a strategist at Great Wall Securities in Shenzhen.
The 4 trillion yuan plan announced late on Sunday includes increased spending on social welfare, affordable housing and rural infrastructure - areas deemed crucial for stimulating the domestic consumer spending needed to offset weakening demand for Chinese exports.
China's export-driven economic growth slowed to 9% in the third quarter, its lowest level in five years and well below last year's 11.9%.
Apart from accelerating and increasing spending, authorities are also loosening credit conditions and cutting taxes, although exact details of the plan have not been disclosed.
China's share markets have languished in the past year, with the Shanghai benchmark hitting an all time peak of 6 124.04 in mid-October 2007.
Monday's rally raised hopes that the market may have finally hit bottom.
"People were very pessimistic about the economy, and the stimulus package has finally eased those worries," said Zhai Peng, an analyst for Guotai Junan Securities in Shanghai.
"I think the market will turn around," he said. "The economy is bound to improve after the government made such huge efforts to boost it."
Most major listed companies saw gains of 5% or more on Monday.
Shanghai-based Baoshan Iron & Steel hit the daily upside limit of 10% at 5.04 yuan; Air China jumped 9.9% to 3.76 yuan and China Life Insurance gained 7.8% to 20.68 yuan.
Industrial & Commercial Bank of China jumped 5.8% to 3.99 yuan, and Poly Real Estate added 9.9% to 14.11 yuan.
- AP