European Markets Rise After US Fed QE3 Announcement

European markets rose Friday as investor sentiment turned positive following the announcement of another round of quantitative easing by the U.S. Federal Reserve.

The French CAC 40 index was up 1.81 percent or 63.35 points to 3565.44. Shares of ArcelorMittal gained 6.28 percent and those of Peugeot SA climbed 3.85 percent.

London's FTSE 100 index rose 1.30 percent or 75.72 points to 5895.64. Shares of Barclays PLC climbed 3.23 percent and those of Burberry Group PLC advanced 2.57 percent.

The German DAX 30 index climbed 1.37 percent or 100.06 points to 7410.38. Shares of Commerzbank AG advanced 4.85 percent and shares of Volkswagen AG climbed 2.86 percent.

Spain's IBEX 35 was up 2.28 percent or 181.20 points to 8117.10. Shares of Bankinter SA climbed 3.65 percent and those of Abengoa SA gained 2.87 percent.

On Thursday, the Fed announced another large scale of asset purchase program. It announced an open-ended purchasing of $40 billion per month of the mortgage-backed securities until labor markets improved substantially. The Fed extended its forward guidance of low Fed funds rate level to mid-2015 from late 2014.

"The implication is that the Fed is pulling out all the stops to drive down mortgage rates with this program. Tying the length of the program to improvement in the labor market could add power to the punch," Paul Edelstein, an economist at IHS Global Insight, said.

The Eurogroup/ECOFIN convenes in Nicosia, Cyprus, Friday. The establishment of the Single Supervisory Mechanism, along the recent proposals of the European Commission, and the fiscal implications of a Banking Union will be discussed in the meeting.

The details related to a possible demand by Spain for financial assistance from the European Financial Stability Facility and the European Stability Mechanism could be expected to come out of the meeting. This would enable the ECB to activate its new bond-buying plan called the Outright Monetary Transactions (OMT).

Bonds in the countries implementing the approved fiscal austerity measures and maturing within three years will be focused in the OMT. Investors feel that such bold measures will give the much-needed thrust to boost liquidity in the euro zone financial system.