Wall Street opened the week on a positive note as stocks moved sharply higher around the world following government efforts to bolster economic growth.
Minutes after the start of trading, the Dow Jones industrial average was up 260 points, or about 3 percent, and the Standard & Poor's 500-stock index was also up about 3 percent.
A week after a wave of coordinated interest rate cuts by major central banks, investors were hoping for new stimulus measures.
In the United States, President-elect Barack Obama pledged over the weekend to roll out the biggest public works program in decades. India announced tax cuts and added spending plans and its central bank also followed its peers around the world in lowering interest rates. And Chinese policy makers opened an annual economic conference in Beijing on Monday that is expected to focus on measures to increase consumption.
Stocks in Hong Kong, Frankfurt and Paris rose nearly 7 percent, and indexes in England and Tokyo were up about 5 percent.
Valérie Cazaban, a fund manager at Stratège Finance in Paris, said stocks had gotten a temporary jolt from the proposed stimulus measures but that there was no change to the underlying sentiment. "Stocks are up for the moment," she said, but "the market is still in a bear trend. Today we've got a technical rally."
In morning trading, the Dow Jones Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 6.4 percent, while the FTSE 100 index in London gained 4.6 percent. The CAC 40 in Paris was 6.4 percent higher and the DAX in Frankfurt rose 6.3 percent.
Asian markets rose sharply. The Tokyo benchmark Nikkei 225 stock average rose 5.2 percent, while the S&P/ASX 200 index in Sydney gained 4.1 percent. The Hang Seng index in Hong Kong closed up 8.6 percent in late and the Shanghai Stock Exchange composite index rose 3.6 percent.
United States crude oil futures for January delivery rose $2.45 to $43.26 a barrel.
Investors noted that the global rally came amid grim economic news from around the world, and was thus likely a so-called "bear-market rally," a sudden surge of buying amid a generally negative market. Volatility in American stocks, as measured by the VIX index, remains at extremely elevated levels.
Perhaps the single best indicator of the state of the economy, the job market is collapsing faster than most economists had anticipated. The latest U.S. employment data, released Friday, showed U.S. employers cut 533,000 jobs in November, the most in 34 years, while the jobless rate rose to 6.7 percent, the highest since 1993.
Eisuke Sakakibara, a former Finance Ministry official in Japan and now a professor at Waseda University, said Monday at a forum in Hong Kong that the decline in asset prices, far from nearing an end, "has only started."
"Most businesses are flying blind, and there is a natural inclination to cut back on spending," Tony Tyler, chief executive of Cathay Pacific, the Hong Kong-based airline, said at the same forum.
The dollar was lower against major European currencies. The euro rose to $1.2883 from $1.2718 late Friday in New York, while the British pound rose to $1.4972 from $1.4686. The U.S. currency fell to 1.2118 Swiss francs from 1.2201 francs. But the dollar rose to 93.20 yen from 92.84.
Cazaban said that while there would be a short-term gain from the American fiscal stimulus, there was a danger that by undertaking such huge measures, the United States could be creating longer-term problems for its currency.
"The millions, billions, trillions of dollars they're talking about are dizzying," she said, and the United States might eventually seek to ease the burden of repaying foreign bondholders by weakening the dollar.
