(Updates with closing prices, milestones; adds NEW YORK dateline, comment)
NEW YORK/LONDON, June 23 (Reuters) - Arabica coffee futures vaulted higher on Friday, notching their largest one-day gain in a year, as options-related dealings spurred short-covering following Thursday's sharp decline.
Raw sugar on ICE Futures U.S. rose from a 16-month low and cocoa futures rallied, snapping a six-session rout.
* September arabica coffee settled up 6.5 cents, or 5.58 percent, at $1.23 per lb, rebounding from the previous session's plunge of more than 5 percent.
* The surge lifted arabica off Thursday's 16-month lows, but was not enough to keep the benchmark contract from posting a second straight weekly loss.
* Arabica's premium over robusta fell to a fresh low, the smallest since at least 2008, according to exchange data compiled by Reuters.
* Traders said the market was technically oversold on Friday, which lent chart support and inspired some corrective buying.
* "Yesterday we saw new speculator selling as well as long liquidation. People were sellers" of put options, said Nick Gentile, managing partner of commodity trading advisor NickJen Capital.
"They're being forced to buy back now," he said.
* Lack of origin selling by producers also lent support. However, appetite from roasters remained lackluster, dealers noted, as they sit on sufficient nearby coffee supplies.
* ICE September robusta coffee settled up $48, or 2.36 percent, at $2,078 per tonne, recovering after four days of decline.
* Still, prices posted their first weekly loss in five weeks.
* ICE September New York cocoa settled up $56, or 3.07 percent, at $1,879 per tonne, rebounding after the largest six-day slide since 2008.
* Technical signals and a weaker U.S. dollar helped lift prices.
* "We're correcting an oversold market," Gentile said.
* Friday's gains lifted prices out of the technically oversold territory touched, on a short-term basis, the previous two sessions.
* September London cocoa settled up 33 pounds, or 2.22 percent, at 1,518 pounds per tonne.
* The fundamental outlook remained bearish, traders said, citing expectations of surplus supplies.
* July raw sugar settled up 0.11 cent, or 0.84 percent, at 13.17 cents per lb after touching a fresh 16-month low of 12.76 cents, the lowest level since late February 2016.
* Front-month prices finished the week down 3.5 percent, under pressure from favorable dry weather in top grower Brazil, which bolstered expectations for strong output from the key center-south cane region.
* August white sugar settled up $3, or 0.76 percent, at $395.50 per tonne. (Reporting by Chris Prentice in New York and Ana Ionova in London; Editing by David Clarke and Paul Simao)