SYDNEY (AFP) — Australian shares jumped 5.7 percent in early trade on Monday after the government guaranteed bank deposits following a breathtaking stocks plunge last week. The benchmark S&P/ASX 200 rose 225.9 points to 4,186.6, while the broader All Ordinaries surged 211.7 points or 5.37 percent to 4,151.2 with financials and mining shares leading Asia-Pacific's second largest market upwards. Banking shares opened sharply higher following Sunday's announcement by Prime Minister Kevin Rudd that the government would guarantee deposits held in Australian financial institutions for the next three years. The guarantee has boosted confidence, although it was probably not enough to ensure a lasting change in market direction, ABN Amro Morgan private client adviser Bill Bishop said. "They've demonstrated they're fair dinkum about this. This is the first really solid move for the market to get its teeth into and it's a wonderful bounce to give people a bit of confidence," he said. The optimistic start followed last week's horror show on the stock market, which closed with the largest one-day pounding of share prices in 21 years. The Australian market shed 8.3 percent or more than 106 billion dollars (70.8 billion US) in value Friday, pushing losses for the week to a mammoth 230 billion dollars as the global financial crisis struck markets across the world. The government's intervention on Sunday, which was matched by a similar move in New Zealand, signalled a bid to stem the global tide of panic that has been battering local markets. Rudd also guaranteed the borrowings of Australian banks in international credit markets and doubled to eight billion dollars a scheme to purchase residential mortgage-backed securities to shore up the mortgage market. The move came amid a flurry of meetings between leaders of the world's major economies aimed at stabilising the turmoil that is threatening to throw the world into a deep recession. Australian Banking stocks surged on Monday morning, with National Australia Bank jumping 10.82 percent to 23.05 dollars, Commonwealth Bank rising 6.35 percent to 42.06 and ANZ Banking Group increasing 9.28 percent, to 16.72. Westpac climbed 8.42 percent to 21.89, while its takeover target St George Bank added 9.17 percent to 27.50 dollars. The investment giant Macquarie Group meanwhile jumped 11.36 percent, to 31.76. Australia's big miners also rose sharply, with BHP Billiton up 1.71 dollars or 6.16 percent at 29.45, while rival and takeover target Rio Tinto gained 5.10 or 6.99 percent to 78.10. The gold miners were among the few companies to fall, after the price of the precious metal fell late on Friday. Gold for December delivery fell 27.50 US dollars, or 3.1 percent, to settle at 859 US dollars an ounce on the New York Mercantile Exchange. Australia's Newcrest Mining lost 1.6 percent, to 25.23, while Lihir Gold dropped 4.42 percent to 2.38 and Newmont Mining fell 2.4 percent to 4.88. Fund manager Valad Property Group surged a huge 63 percent after announcing it had withdrawn its earnings guidance of seven to nine cents per stapled security given in August as a result of "unprecedented deterioration" in the financial markets.

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