Sentinal House in Glasgow, where the new jobs will be based

JPMorgan said it would employ the IT staff at its city base over two years.

Company bosses said they had originally considered expanding their centres in America and India and had also been looking at Eastern European locations.

The deputy first minister said the move demonstrated the strength of the financial services sector in Scotland, which has grown by 36% since 2000.

Nicol Stephen defended the grant that is being given to JPMorgan under the executive's Regional Selective Assistance Fund.

It's another huge boost for Glasgow's international financial services district Stuart Patrick Scottish Enterprise Glasgow

He said other countries offered similar incentives to attract businesses.

Paul Murphy, chief executive officer for JPMorgan Scotland, said the quality and skills of the staff in their European technology centre in Glasgow was a major advantage.

The company set up its operation there in 1999 and currently employs 700 people.

The new posts are described as high-quality software design and development jobs, with an average salary of �35,000.

'Most prized'

As part of the condition of the grant, the payment of the funds will be phased and the jobs will also have to be sustained for a period of time after the final payment.

Martin Togneri, chief executive of Scottish Development International, stressed the value of the new posts.

"Highly skilled design and development jobs, such as the ones JPMorgan is announcing today, are among the most prized by our competitors for inward investment, particularly in important and fast-growing industries like financial services," he said.