US stocks surged on Friday to close out a sour quarter on a high note a s investors cheered an agreement by European leaders to stabilise the region's banks, a pact that helped remove some of the uncertainty that has plagued markets. The broad rally was the S&P 500's best day since December 20 and helped the benchmark index trim its quarterly loss to 3.3 percent.

The decline marked the S&P 500's first down quarter in the last three after tumultuous Greek elections and concerns about the solvency of Spanish banks roiled financial markets around the world. Sectors sensitive to euro-zone developments ranked among the best performers. US bank stocks were among the market leaders as the KBW bank index jumped 2.7 percent. Shares of Bank of America Corp rose 5.7 percent to $8.18. The PHLX Europe sector index climbed 4 percent.

The Dow Jones industrial average jumped 277.83 points, or 2.20 percent, to 12,880.09 at the close. The Standard & Poor's 500 Index rose 33.12 points, or 2.49 percent, to 1,362.16. The Nasdaq Composite Index climbed 85.56 points, or 3.00 percent, to 2,935.05.

For the week, the Dow gained 1.9 percent, the S&P 500 rose 2 percent and the Nasdaq advanced 1.5 percent. For the month of June, the Dow rose 3.9 percent, the S&P climbed 4 percent and the Nasdaq added 3.8 percent. But for the second quarter, the Dow fell 2.5 percent, the S&P 500 lost 3.3 percent and the Nasdaq dropped 5.1 percent.

Volume was active with about 7.69 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the daily average of 6.85 billion. Advancing stocks outnumbered declining ones on the NYSE by 2,669 to 388. On the Nasdaq, advancers beat decliners by 2,174 to 376.

Copyright Reuters, 2012