15/09/2012 (Reuters) - Malaysian palm oil futures rose on Friday after the U.S. Federal Reserve kicked off a third round of quantitative easing to stimulate its economy and as investors took up positions ahead of a long weekend.

The Fed said it will buy $40 billion of mortgage-backed debt each month in the world's largest economy, lifting global prices of oil, grains gold prices on expectations that global economy and commodity demand will continue to grow.

"The market is up on the back of yesterday's QE3 announcement. The market has also been oversold for quite some time and is now recovering a bit," said a trader with a foreign commodities brokerage.

"There is a lot of covering ahead of a 3-day holiday," the trader added. Local markets will be closed on Monday following the Malaysia Day public holiday, which falls on Sunday.

The benchmark November contract on the Bursa Malaysia Derivatives Exchange ended up 0.8 percent to 2,936 ringgit ($966.1) per tonne after going as high as 2,945 ringgit.

Total traded volume stood at 33,029 lots of 25 tonnes each, up from the usual 25,000 tonnes as trades locked in postions ahead of long weekend holiday.

Technicals showed Malaysian palm oil will retest a resistance at 2,960 ringgit per tonne as a rebound from the Sept. 11 low of 2,874 ringgit has not completed, said Reuters market analyst Wang Tao.

The widening discount between edible soyoil and palm oil has helped shift demand to the cheaper tropical oil, but investors remain cautious due to rising inventory levels in the No.2 producer.

"Everybody knows that stock is still plentiful and I won't be surprised if September stocks go higher. That's why market is a bit depressed although the spread between bean oil and palm oil is more than $300 per tonne," the trader said.

Brent crude rose for the seventh straight session on Friday, climbing towards $118 a barrel on hopes for stronger global demand for oil and expectations that the spillover effects will reach the commodity markets.

In other vegetable oil markets, U.S. soyoil for December delivery climbed nearly 1 percent, buoyed by the U.S. Federal Reserve's announcement which investors hope will improve the demand outlook for raw materials.

The most active January 2013 soyoil contract on the Dalian Commodity Exchange climbed 1.2 percent.

  Palm, soy and crude oil prices at 1018 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      SEP2       0    +0.00       0       0       0
  MY PALM OIL      OCT2    2873   +18.00    2842    2876     779
  MY PALM OIL      NOV2    2936   +24.00    2905    2945   14938
  CHINA PALM OLEIN JAN3    8046   +56.00    8010    8098  256058
  CHINA SOYOIL     JAN3   10216  +118.00   10136   10230  548468
  CBOT SOY OIL     DEC2   57.61    +0.60   56.79   57.80    8496
  NYMEX CRUDE      OCT2  100.18    +1.87   97.99  100.42   38053

  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil and RBD palm olein in Chinese yuan per tonne
  Crude in U.S. dollars per barrel