Oil and metal prices have risen sharply in reaction to China's stimulus plan worth almost $600 billion (£383.5 billion) in a bid to shore up its economic growth.

New York crude rose $2.46 to $63.50 a barrel and Brent moved up $2.36 to $59.71. Iron ore, copper, zinc and lead all surged on hopes that the measure will lift demand for commodities in China. The International Monetary Fund applauded the move and said it was good news for the global economy Beijing's four trillion yuan (£374.5 billion) package will go to construct low-rent housing and regional infrastructure including railways, roads and airports.

It also announced a shift to a "moderately easy" monetary policy, suggesting more rate cuts. Just months ago, fighting inflation was the main preoccupation of the central bank. As the financial crisis grew and exports fell, China switched focus and has cut rate three times since mid-September.

The head of China's central bank, Zhou Xiaochuan, said "the bank lending interest rate could become lower". Zhou predicts Chinese GDP growth will soften to between 8% and 9% next year.

Despite the new optimism, mining giant Rio Tinto said it is cutting output at its iron ore mines in Western Australia by 10% due to falling Chinese demand.

"This reduction is a prudent move to align production with revised customer delivery requirements in the light of the fourth- quarter drop in Chinese demand," chief executive Tom said.