NEW YORK--Copper futures extended gains Friday, rallying more than 3% in morning trade amid elation over the Federal Reserve's plans to boost economic growth and support the labor market.

The most actively traded contract, for December delivery, was recently up 12.00 cents, or 3.2%, at $3.8300 a pound on the Comex division of the New York Mercantile Exchange.

Copper prices lunged higher after the Fed's policy setting arm announced a third bond purchasing program aimed at cutting long-term interest rates. The Federal Open Market Committee also said it expects for short-term interest rates to remain near zero until 2015, extending their outlook by a year.

"Base metals have hopped on board to ride the wave as equity and commodity markets storm ahead," traders at RBC Capital Markets said in a note to clients.

Copper's rally continued for a second day Friday, as investors had more time to assess the likely impact of monetary easing on economic growth. Copper wires and pipes are widely used in construction and manufacturing, and demand for such products tends to rise as economic activity expands.

"Overall we are sticking to our pre summer call of a strong Q4 for metal prices," RBC said.

A weaker dollar also bolstered copper's rally. The dollar retreated against the euro, with the single European currency recently trading up 1.1% at $1.3127.

As the dollar weakens, dollar-denominated copper futures become less expensive for investors who use other currencies, luring these buyers to the market.

However, analysts at Standard Bank warned that while the liquidity injection is initially a purely monetary phenomenon, copper's gains could fade over the next three to six months "if real demand conditions for these commodities do not improve."

Write to Tatyana Shumsky at tatyana.shumsky@dowjones.com

(END) Dow Jones Newswires

09-14-12 1000ET