* Commodity indexes reverse declining trend to end Q3 up
* Weak dollar and data suggesting recovery aid sentiment
NEW YORK, Sept 30 - Oil prices jumped 6 percent to lead a broad rally in commodities on Wednesday as strong gasoline demand and a weaker dollar helped turn around a loss-making third quarter for the asset class.
The world's top three commodity indexes -- the Reuters-Jefferies CRB, the Standard & Poors GSCI and the Dow Jones-UBS -- posted total returns averaging 6.2 percent for the three months to September.
Until Monday, the indexes were averaging a loss of about 3 percent in total returns for the third quarter, compared with a 15 percent gain in the second quarter.
Total returns on commodity indexes are arrived at after deducting participation costs for investors.
The turn-around in index returns was sparked by government data showing a surprising drop in gasoline inventories in the United States, the world's largest energy consumer.
Oil is a major component of most commodity indexes, and a sharp move in its price tends to affect their performance.
Copper, gold, cocoa and sugar prices also rallied as a weaker dollar made dollar-denominated commodities cheaper for users of other currencies. The dollar fell as a mixed batch of reports suggested the U.S. economy was on a generally stable path to recovery.
"Dollar weakness and quarter-end buying are helping," said Carl Firman, an analyst for industrial metals at London's Virtual Metals.
The benchmark front-month contract in U.S. crude oil settled up $5.85, or about 6 percent, at $70.61 a barrel on the New York Mercantile Exchange, or NYMEX.
NYMEX crude has been a roller-coaster ride over the last 14 months -- touching a record high of nearly $150 a barrel in July 2008, then falling to around $33 at the height of the financial crisis before rebounding to $75 in August.
For weeks, the market has been trapped in the $65-$75 range as investors watched stockpiles of U.S. crude mount. Stocks stand at around 19-year highs.
Wednesday's data showing a drop of 1.6 million barrels in U.S. gasoline inventories -- coming on top of a 5 percent rise in gasoline demand over the last four weeks -- alleviated some of those concerns.
"It's certainly a positive sign for gasoline prices and implied gasoline demand is also up," said Addison Armstrong, director of market research with Tradition Energy in Connecticut.
Copper prices rose 24 percent in the third quarter, hitting one-week highs in London and New York during Wednesday's session.
Copper for three month delivery on the London Metal Exchange closed up $175 at $6,155 a tonne.
U.S. copper for December ended up 9 cents, or about 3 percent, at $2.8190 a lb on the COMEX metals division of NYMEX.
Like oil, copper has seen inventories soar in recent months, preventing prices from breaking above the August peak of $2.9895 a lb on COMEX and $6,540 a tonne on the LME.
The cocoa and sugar markets rose more than 2 percent each.
New York's December cocoa contract went up $84 to end at $3,140 per tonne. London December cocoa added 49 pounds to settle at 2,085 pounds per tonne, having hit a lifetime top of 2,090 pounds.
New York's active March raw sugar contract climbed 0.45 cent to settle at 25.39 cents per lb. London's December white sugar contract increased $7 to finish at $618 per tonne.
