MARKET CLOSE Stocks on Wall Street surged, ending a five-day cycle of down markets, as investors reacted to signs a deal was close to averting the fiscal cliff.
The Dow Jones Industrial Average finished 166.03 points, or 1.3%, higher at 13,104.14, regaining all of last Friday's losses. The Dow had then slumped 158 points, or 1.2%, for its fifth-straight loss and to close at the lowest level since November 27.
The S&P 500 index was up 1.7% at 1426.19 and the Nasdaq Composite Index gained 2.0%, to 3019.51.
The Dow fell 0.67% this month but rose 7.3% in the year. The S&P 500 climbed 0.71% this month and jumped 13% this year and the Nasdaq edged up 0.3% this month and soared 16% in the year.
In fresh economic data, manufacturing activity in the Dallas region rose to a positive reading of 6.8 in December, versus -2.8 a month before.
In Europe, the Stoxx Europe 600 index moved 0.3% higher to end the year at 279.68 and a 14% gain. This is the biggest yearly advance since 2009.
On a monthly basis, the index gained 1.4%, while adding 4.2% for the quarter.
Many regional markets were closed for New Year's Eve, while others were open only for a shortened trading day.
In London, the FTSE 100 index dropped 0.5% to 5897.81, cutting gains for the year to 5.8%.
Asian stock markets were mostly lower, though encouraging manufacturing data out of China helped limit losses caused by uncertainty over the US budget talks.
Hong Kong's Hang Seng came off lows and ended flat at 22,656.92 and a 22.9% year-to-date gain.
Australian markets also got a lift from the upbeat Chinese data with the S&P/ASX 200 paring earlier losses to finish 0.5% lower at 4648.90 in half day trade. The index gained 15% for the year.
China’s Shanghai index rose 1.1% and Singapore's Straits Times Index fell 0.8%. Japan was closed.
Oil down for year, gold ends higher
Crude-oil futures ended the last day of 2012 higher.
Light, sweet crude for February delivery settled $US1.02, or 1%, higher at $US91.82 a barrel on the New York but fell 7.1% for the year.
Brent crude settled on the ICE futures exchange 49USc, or 0.4%, higher at $US111.11 a barrel and gained 3.5% for the year.
Gold extended its winning streak for a 12th consecutive year.
The front-month contract for January delivery gained $US19.90, or 1.2%, to settle at $US1674.80 an ounce in New York. It ended the year up 7%, after gaining 10% in 2011.