Stocks: Friday’s review

European stocks advanced to their highest level in 14 months after the Federal Reserve said it will buy mortgage-backed securities to encourage economic growth in the world’s largest economy.

BHP Billiton Ltd. (BHP) and Rio Tinto Group jumped 5.8 percent and 6.5 percent, respectively, as Australia’s Treasurer said the country’s resource boom will continue. Lonmin Plc (LMI) rose 4.8 percent as it resumed talks with striking miners at its platinum mine in South Africa.

The Stoxx Europe 600 Index advanced 1.1 percent to 275.51 at 4:30 p.m. in London, its highest level since July 7, 2011.

The Fed said it will increase its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month. The central bank will continue to buy mortgage- backed securities until the outlook for the labor market substantially improves, the Federal Open Market Committee said yesterday in a statement at the end of its two-day meeting in Washington.

The FOMC also said it will probably hold the federal funds rate near zero until at least the middle of 2015. The Fed had said the rate would stay low through late 2014. Fed officials said economic growth will improve faster than they had projected, as they upgraded their estimates for gross domestic product growth in 2013 and 2014.

Euro-area finance ministers and central-bank officials hold a two-day meeting starting today in Cyprus to discuss plans for a banking union in the 17-nation currency zone.

European stocks extended their gains after the Thomson Reuters/University of Michigan gauge of consumer confidence unexpectedly climbed. The preliminary index of consumer sentiment rose to 79.2 in September from 74.3 in August. The median forecast of economists had called for a reading of 74.

National benchmark indexes rose in all 18 western-European markets.

FTSE 100 5,898.55 +78.63 +1.35% CAC 40 3,570.64 +68.55 +1.96% DAX 7,401.59 +91.27 +1.25%

Petropavlovsk Plc, a miner of gold in Russia, jumped 14 percent to 431.9 pence. Antofagasta Plc, which owns copper mines in Chile, rose 7 percent to 1,323 pence, its biggest rally in eight months, as metal prices jumped in London.

Nyrstar (NYR) NV, the largest producer of refined zinc, gained 10 percent to 5.28 euros. Evraz Plc (EVR), the mining company and steelmaker partly owned by billionaire Roman Abramovich, soared 13 percent to 293.2 pence. Vedanta Resources Plc (VED) surged 13 percent to 1,090 pence.

Chemring Group Plc advanced 5.3 percent to 344.9 pence. The company said that the U.K.’s Takeover Panel has extended a deadline for Carlyle Group LP to make a bid until Oct. 12.

Lonmin Plc rose 4.8 percent to 613.5 pence. The third- largest platinum producer by volume resumed talks in South Africa today to end an illegal strike that has spread to nearby mines that tap the world’s richest reserves of the metal.

The preferred shares of Volkswagen AG (VOW) added 4.9 percent to 152.50 euros. Europe’s largest carmaker said sales in August rose 19 percent to 719,500 vehicles.

Major U.S. stock indexes ended the growth of the fourth consecutive session. For the week DOW index added 2,16%, Nasdaq rose by 1,52%, S & P500 rose 1.94%.

Indexes rose against yesterday's decision of the Committee on the Federal Open Market. Today's growth is moderate compared to yesterday due to the reluctance of market participants to take long positions in anticipation of the weekend.

Growth indices also restrict speculation about the high probability that a new round of QE will not have such a strong positive impact on the stock market as the previous ones, because these actions by the Federal Reserve was widely expected and it was included in the price. It is worth noting that, despite the Fed's statement on the "unlimited" dates for the new round of QE, it is much less than previous programs (for the year under QE3 will spend $ 0.48 trillion from $ 1.7 trillion. Under QE1 and $ 0.6 trillion . as part of QE2).

Statistics released today was mixed, its impact on the dynamics of trade is negligible.

Thus, industrial production in August fell by 1.2% against the expected growth of 0.2% in this case, increased inventories (+0.8% in July vs. +0.3%).

Consumer sentiment index from Reuters / Michigan (preliminary data) in September rose to 79.2 against 74.3 in August and 74.1 forecast.

The inflation data were mixed: the total value of the consumer price index was below forecasts, basic - above.

As a part of most of the components of the index DOW surged. In the red are 14 components, of which the shares have fallen more than other AT & T, Inc (T, -2.78%). More than others in the share price rose Caterpillar (CAT, +2.46%).

Most of the major economic sectors are growing. The leader is the sector conglomerates (2.1%). In the red are only sector utilities (-0.7%) and the health sector (-0.5%).

At the close:

Dow 13,593.37 +53.51 +0.40%

Nasdaq 3,183.95 +28.12 +0.89%

S & P 500 1,465.76 +5.77 +0.40%