Traders hoped the move – a $586bn (£374.6bn) package of spending, subsidies and tax cuts – would help stave off a slowdown – and sent the FTSE 4 per cent higher at one point.

Gains in Asian markets ensured a healthy start in London but a muted response from Wall Street's Dow Jones saw the Footsie give back much of the advance to finish 38.96 points or 1 per cent ahead at 4403.92.

US markets mulled over the latest losses for nationalised mortgage giant Fannie Mae and bailed-out insurer AIG as the Dow Jones Industrial Average trod water.

Several mining stocks were registering double-figure gains nonetheless as investors took heart amid hopes of increased oil and metals demand from the Chinese stimulus.

Anglo American led the blue-chip index, up almost 12 per cent or 156p to 1506p. The stock was closely followed by Xstrata, up 123p to 1191p.

In all, five commodity stocks posted gains of 10 per cent or more including oil and gas services firm Wood Group, up 22p to stand at 239p.

In a volatile session for crude oil, the petrochemical majors gave back stronger gains seen earlier as oil fell to below $61 a barrel. BP and Royal Dutch Shell eventually finished 43/4p better at 5193/4p and 4p down at 1689p, respectively.

British Airways continued to progress, up more than 7 per cent or 11p to 157p, as analysts upgraded their forecasts after the company's well-received half-year results on Friday.

But banks were on the back foot after HSBC said pre-tax profits were below last year in the first nine months of the year. In spite of the wider market gains it fell 11p to 7351/2p.

Its update dragged Standard Chartered, 441/2p lower at 8951/2p, after HSBC said it had seen signs of slowdown in Asia's rapid growth.

HBoS proved the exception, rising 31/2p to 1073/4p, after the former heads of Royal Bank of Scotland and Bank of Scotland announced their interest in creating an alternative to the current Lloyds TSB takeover. Reported interest from the Bank of China also helped the stock.

The leading Footsie faller was supermarket giant Tesco on more Asian concerns as sales in its key South Korean market struggled. Shares fell 201/4p to 323p, or 6 per cent.

In the second tier, Country Life butter firm Dairy Crest slumped 861/2p to stand at 2431/2p after it warned annual profits would be 10 per cent down on last year due to higher milk costs and the economic slump.

Dairy Crest was followed lower by bank note printing firm De La Rue which closed 611/2p lower at 8571/2p in the FTSE 250 after Citigroup slapped a sell rating on the company in the worsening economic climate.

The biggest Footsie risers were Anglo American up 156p at 1506p, Xstrata ahead 123p at 1191p, BHP Billiton up 108p at 1123p and London Stock Exchange ahead 611/2p at 664p.

The biggest faller was Tesco down 201/4p at 323p.