COMMODITIES-Biggest 2012 rally as EU acts, but Q2 in red

* Markets spike on EU deal for Italy, Spain borrowing costs

* U.S. crude oil up 9 pct, most since March 2009

* CRB notches biggest one-day gain in 2-1/4 years

* Most markets still down for qtr; few think rally will last (Updates with markets' close and oil's 9 pct rally for day)

By Barani Krishnan

NEW YORK, June 29 (Reuters) - Commodity markets posted their biggest rally for the year o n F riday, with oil prices rocketing 9 percent, as a long-awaited debt deal in Europe pushed buyers back into a sector that had logged few gains since May.

The rally on the final trading day of June saved commodities from posting their worst quarterly loss since the onset of the financial crisis in 2008.

The 8 percent drop for the quarter on the Thomson Reuters-Jefferies CRB index for commodities was instead the sharpest since the third quarter of 2011.

The last-gasp run-up came after European leaders surprised markets by agreeing at the end of a two-day meeting to cut soaring borrowing costs in Spain and Italy. Many investors had expected the talks to yield no meaningful deal.

The euro headed for its best day against the dollar in eight months after the pact, making dollar-denominated commodities such as oil even more attractive to euro holders.

U.S. crude oil jumped more than $7 per barrel, the biggest gain in a session since March 2009. Copper had its biggest one-day rally in seven months, and gold its largest run-up since the start of June.

Corn, soybeans and wheat prices also powered to new highs, extending this month's unexpected rally on fears that hot, dry weather was decimating crops in the U.S. Midwest.

Barring the quarterly loss, the CRB finished the session up 4.6 percent -- its biggest daily advance since May 19, 2009. For the month, the index rose 4.1 percent, its most since October last year.

But the 11th-hour rally gave few investors and analysts confidence that commodities were on a path to long-term recovery.

"Only when you have structural fixes can you think about a third quarter that will look a lot more positive," said Pau Morilla-Giner, who runs London & Capital's $280 million Global Commodities Fund.

Some said the EU deal disregarded inherent weaknesses in the euro zone monetary system that left markets vulnerable to even more violent shocks in the future.

European leaders, weighing pleas for help from Spain and Italy and considering the two could otherwise block a package of growth measures, agreed to let EU rescue funds be used for stabilizing bond markets of member nations without additional austerity or reform conditions.

But details of the deal had yet to be worked out and leaders appeared at odds over just how strict the conditions attached to any assistance should be.

"This is another band-aid," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.

U.S. crude oil closed up $7.27, or 9.4 percent, at $84.96 per barrel, recovering most of the more than $8 it had lost from the beginning of June through Thursday.

London's Brent crude oil ended up $6.44, or 7.1 percent, at $97.80 per barrel. It had slid more than $10 earlier in the month.

Oil was still the biggest loser in commodities for the quarter, with U.S. crude down nearly 18 percent and Brent 20 percent.

"What has changed today is the market sentiment. The fundamentals may evolve at a more glacial pace," said Tim Evans, energy analyst for Citi Futures Perspective.

Copper's benchmark three-month contract in London closed up 4 percent, or $305, at a near one-month high of $7,690 a tonne.

Aside from the euro zone deal, copper received a boost from a policy decision by China, the top consumer of the metal, that favored commodity investors. China's central bank said it would use a basket of policy tools to keep credit and money supply growth at a steady and reasonable pace.

While copper rose for the day, it dropped nearly 11 percent on the quarter, its worst performance since the third quarter of 2011.

Gianclaudio Torlizzi of T-Commodity was unconvinced that Friday's rally in copper was backed by fundamentals, saying the EU deal "has given funds a pretext to pile up on metals".

Gold rose about 3 percent, with the spot price of bullion scaling a one-month high of $1,600 an ounce.

For the quarter, bullion slid 4 percent, its biggest quarterly drop since the three months to September 2008. (Additional reporting by Eric Onstad in London and Manolo Serapio Jr in Singapore; Editing by Marguerita Choy and Dale Hudson)