By Ellis Mnyandu NEW YORK, Nov 10 (Reuters) - U.S. stock index futures rose on Monday, signaling that Wall Street will extend a global equity rally sparked by news that China planned a multibillion economic stimulus to shore up demand in the world's fourth largest economy. Closer to home, shares of American International Group (AIG.N: Quote, Profile, Research, Stock Buzz) rose more than 20 percent to $2.60 before the bell after the Federal Reserve said it would buy $40 billion of shares in the insurer as part of a restructured bail-out package. For details, see [ID:nLA322782]. China on Sunday had approved $586 billion in new government spending between now and 2010, focused largely on infrastructure and social projects. For details, see [ID:nN09395080]. Equity markets around the world jumped as the prospect for recharged growth tempered fears about a deep global recession, with Japan's Nikkei .225 rising nearly 6 percent overnight, and benchmark indexes up about 3 percent or more in Europe. "Part of what we've been concerned about as we look at this global recession was what was China's response going to be," said Arthur Hogan, chief market analyst at Jefferies & Co in Boston. "We believe China is standing firmly behind their economy and that's going to help. The first move was the pop we saw in the price of oil." S&P 500 futures SPc1 rose 18.70 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 climbed 153 points, and Nasdaq 100 NDc1 gained 21 points. Any stabilization in Chinese demand could be a boon for big U.S. manufacturers and exporters, including Caterpillar Inc (CAT.N: Quote, Profile, Research, Stock Buzz) , Boeing Co (BA.N: Quote, Profile, Research, Stock Buzz) and General Electric (GE.N: Quote, Profile, Research, Stock Buzz) , as they grapple with a deepening economic downturn at home. The Fed said the new measures would help AIG establish a more durable capital structure, resolve liquidity issues and , facilitate its plans to sell certain businesses in an orderly manner that promote market stability. They will also protect the interests of the U.S. government and taxpayers. General Motors (GM.N: Quote, Profile, Research, Stock Buzz) rose 5.5 percent at $4.60 before the bell after President-elect Barack Obama said federal help for the distressed auto industry is a "high priority" of his. Ford shares were up 5 percent to $2.12 in thin volume. Less than a month after walking away from Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz) , Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) is in discussions to acquire another U.S. bank, the Wall Street Journal reported, citing people familiar with the situation. [ID:nBNG331096] Citigroup shares were up 3 percent at $12.18 before the bell. U.S. stocks rose on Friday as bargain hunters scooped up shares at multiyear lows after a big drop in the October payrolls was less dire than feared. Still, the market ended in the red for the week. (Editing by Kenneth Barry)

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