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Markets in Europe, Asia end 2011 down but US up

By Pan Pylas

Associated Press

Published: Friday, Dec. 30 2011 6:00 a.m. MST

LONDON — Stock markets around the world were closing out 2011 on a subdued note Friday, with many of the world's major indexes posting big declines for the year in the wake of Europe's debt crisis, a faltering U.S. economy and signs that China's economy is no longer sizzling.

Markets have also been rocked by natural disasters, trading scandals, political upheavals, sharp fluctuations in commodity prices, and the up-and-down price of oil amid the turmoil in the Arab world.

In Europe, the trading backdrop has been particularly grim, with many of the main markets poised to post their worst year since 2008. That's perhaps unsurprising given that most of the attention of the financial world has centered on the debt crisis, which has already seen three relatively small countries bailed out and is threatening much-bigger Italy.

Trading in Europe on Friday was fairly quiet with many traders using the opportunity to close out their books for the year. The FTSE 100 index of leading British shares was down 0.2 percent at 5,556, while Germany's rose 0.3 percent at 5,868. The CAC-40 in France was 0.3 percent higher at 3,136.

With policymakers failing to convince markets that they can deal with the crisis and the eurozone widely-predicted to slip back into recession next year, the euro is ending 2011 softly around the $1.2934 mark after falling to a 15-month low against the dollar on Thursday at $1.2857. The euro started the year at $1.3345.

Wall Street was expecting a flat opening. As things stand, U.S. markets are going to record modest gains for the year, largely on the back of a year-end run following stronger than anticipated U.S. economic data.

Though the performance of the U.S. economy has played second fiddle to Europe for much of the year, it has the potential for shoring up confidence in 2012 if the recent positive news continues.

"Crystal ball-gazing can begin in earnest over the weekend but I am tempted to conclude — more of the same in Europe, easier policy in China, and further asset reflation in the U.S., which finally gets life back into the housing market and thereby drives optimism about the 2013 economic outlook," said Sebastien Galy, an analyst at Societe Generale.

Asian markets have already closed out the year and most markets had a year to forget. Japan's Nikkei 225 index, after three straight days of losses, managed to eke out a 0.4 percent rise Friday to end the year at 8,429.45. However, that was its lowest closing since 1982.

Meanwhile, China's benchmark gained 1.2 percent to close at 2,199.42 — still, a 21 percent loss for the year as the impact of Beijing's multibillion-dollar stimulus faded and the government tightened curbs on lending and investment to cool blistering economic growth.

Elsewhere in Asia, Hong Kong's Hang Seng Index gained 0.2 percent to close at 18,434.39 — a precipitous slide of 19.7 percent from a year ago. Singapore's Straits Times Index closed down 1 percent at 2,646.35 — a 17.5 percent dive.

Australia's benchmark S&P ASX 200 ended the year at 4,140.4 — down 0.4 percent on the day and 14.5 percent lower for 2011. A day earlier, South Korea's benchmark Kospi closed at 1,825.74 on Thursday — 11 percent down on its last trading session of the year Thursday.

Oil prices meanwhile were poised to close out the year around the $100 a barrel mark — benchmark crude for February delivery was up 30 cents at $99.95 a barrel in electronic trading on the New York Mercantile Exchange.

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Pamela Sampson in Bangkok contributed to this report.

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