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Shares up on China stimulus hopes Chinese plans boost Asian shares
(about 6 hours later)
Share prices around the world have jumped amid hopes the Chinese government will announce an expansion to its economic stimulus plan. Asian shares jumped on Thursday after Chinese premier Wen Jiabao gave details of his stimulus package and predicted 8% growth for China this year.
US stock indexes were up more than 2%, while Germany's Dax surged 5.4%, France's Cac 40 rose 4.7% and the UK's FTSE 100 added 3.8%. The Shanghai Composite Index ended the morning session up 1.8% while in Japan the Nikkei index closed 2% higher.
It is expected that Beijing will increase spending in infrastructure, manufacturing and other sectors. Mr Wen said spending on infrastructure, social schemes and tax cuts would send the budget deficit to a 60-year high.
A rise in China's manufacturing index also helped stock market rallies. Markets around the world rose on Wednesday on hopes that Chinese growth could alleviate the global downturn.
The key measure of Chinese manufacturing rose in February for the third month in a row. Manufacturing hopes
The Nikkei 225 closed up 142.5 points at 7,433.5 on Thursday, the first time it had risen for two days in a row since January.
The Shanghai Composite ended the morning up 1.8% at 2,237.6, having closed up 6.1% on Wednesday.
Wednesday's gains came after the key measure of Chinese manufacturing rose in February for the third month in a row.
"What is good for China is good for the world," said Paul Mendelsohn, chief investment strategist at Windham Financial Services."What is good for China is good for the world," said Paul Mendelsohn, chief investment strategist at Windham Financial Services.
China is one of the biggest economies and the second biggest oil consumer. China is one of the world's biggest economies and the second biggest oil consumer.
Attention to details However, share markets in Hong Kong and Mumbai bucked the trend.
Chinese Premier Wen Jiabao is spelling out China's economic and other aims for 2009 in his speech to the National People's Congress, China's parliament. Hong Kong's Hang Seng index traded down 46.4 points, or 0.4% at 12,284.8 while Mumbai's Sensex was down 161 points, or 1.9% at 8,286.
One of the important questions is how much China is going to spend to stimulate its economy.
The size of the original stimulus package unveiled in November was 4tr yuan ($586bn, £419bn).
Besides, economists wonder whether Mr Wen will reiterate China's annual economic growth target of 8%.
The Chinese economy has not grown slower than this yearly target level since 2005, often recording a higher growth.
Earlier, China said it would increase military spending by 14.9% this year to 480.6bn yuan.
Analysts say defence spending is higher than the official figure, but Beijing says there are no hidden outlays.