(CNN) -- Global markets continued their retreat from crisis-triggered losses with renewed vigor Monday after China announced a $586 billion stimulus package aimed at countering a slowdown in the Asian powerhouse's export-led economy.
As effects of the financial turmoil caused by the U.S. sub-prime mortgage meltdown continued to bite, troubled insurere American International Group got a new $150 billion deal from federal government.
The move marks a major leap in the U.S. government's efforts to shore up its creaking financial sector and could unlease a wave of calls for federal rescue plans for other ailing industry giants such as General Motors.
European markets were stronger across the board, with London's FTSE 100, the Paris CAC 40 and Frankfurt's CAC 30 all up more than 3.0 percent by 1130 GMT.
Earlier, Shanghai's index soared 7.3 percent, while Hong Kong's Hang Seng finished the day up 3.5 percent. The stimulus plan pushed Tokyo's Nikkei index 5.8 percent higher.
The response was more muted in other parts of the region.
South Korea's KOSPI index closed 1.6 percent higher.
Australia's All Ordinaries closed down 1.1 percent, while the Taiwan Weighted finished the day essentially even. Singapore's Straits Times index was up 1.3 percent.
In Mumbai, the BSE SENSEX was up 4.6 percent.
The Chinese stimulus package includes loosening of credit restrictions, tax cuts and a massive infrastructure spending program, according to China's Xinhua news agency.
The money will be spent over the next two years to finance several areas, including low-income housing, technological innovation and rebuilding from several disasters -- including the May 12 earthquake in Sichuan province that killed nearly 70,000 people.
The plan was approved Sunday by the State Council.
The growth in China's economy slowed for the first nine months of 2008 compared to the same period last year, officials reported in late October, but still increased by nearly 10 percent.
Wall Street closed Friday on a positive note, with the major indices all gaining 2 to 3 percent after two days of selloffs.
U.S. futures, which offer an indication of how markets may open when trading begins in New York on Monday, were higher.