European stocks advanced to their highest level in 14 months yesterday after the Federal Reserve said it will buy mortgage-backed securities to encourage economic growth in the world’s largest economy, and as euro-area ministers meet in Cyprus. US index futures and Asian shares also climbed.

The Stoxx 600 advanced 1.4% to 276.24 at 12.02pm in London, its highest intra-day level since 8 July, 2011. The benchmark has rallied 18% from this year’s low on 4 June. The gauge is headed for a weekly gain of 1.4%.

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 labour market substantially improves, the Federal Open Market Committee said on Thursday in a statement at the end of its two-day meeting in Washington.

Japan stocks rose, with the Nikkei 225 Stock Average reaching a three-week high. The Nikkei 225 gained 1.8% to 9,159.39 at the 3pm close of trading in Tokyo, while the broader Topix Index climbed 1.7%.

Indian stocks climbed to their highest level in 14 months after the government raised diesel prices for the first time in more than a year. The BSE India Sensitive Index, or Sensex, rose 2.5% to 18,464.27, its highest close since 26 July, 2011. The diesel-price increase, the first since June 2011, will bolster government finances and may increase the chance the Reserve Bank of India will ease monetary policy.

Commodities climbed on speculation the added US stimulus will boost demand. Gold rose to its highest level since February, while copper jumped as much as 3.5% on the London Metal Exchange, the highest since 2 May.