THE EURO zone sovereign debt crisis left most markets trailing in 2011, although many indices began to claw back losses in the closing weeks of the year.

The Iseq index of Irish shares finished slightly ahead, ending the year up 16 points, or just over 0.5 per cent.

The benchmark FTSE 100 index posted a 5.6 per cent drop this year, amid concern that the euro area debt crisis will hamper equity-market gains in 2012.

Banks, along with metals and mining companies, accounted for the biggest annual declines among Britain’s biggest 350 companies amid concern that the fiscal crisis is spreading to the euro region’s larger economies.

The Dow Jones Stoxx 600, which tracks leading stocks across 18 European markets, retreated 12 per cent this year, the first decline since 2008’s 46 per cent plunge, as the euro region’s sovereign debt crisis spread from Greece to Italy and Spain, driving yields on government debt to record levels.

Banks had the biggest drop among 19 industry groups this year, sliding 33 per cent, on growing concern that the fiscal crisis will force at least one nation to default on its debt.

Healthcare and food stocks advanced as investors sought companies whose earnings are less tied to economic growth.

The Stoxx 600 gained 5.6 per cent from the start of the year to its peak on February 17th before declining as concerns about the debt crisis mounted. The index sank 26 per cent from that high to its low on September 22nd, entering a bear market.

The gauge had its worst third quarter since 2002, dropping 17 per cent, as US leaders wrangled over deficit cuts and European policymakers struggled to contain the debt crisis.

In New York, the SP 500 started the year with a rally, rising as much as 8.4 per cent to a three-year high by the end of April.

The index tumbled throughout the summer, as Congress and US president Barack Obama struggled over US deficit cuts, and sank further amid concern that the euro area’s debt crisis was threatening the global economic recovery.

Data signalling that the world’s largest economy was weathering Europe’s crisis helped the market rebound. The US unemployment rate fell to 8.6 per cent in November, the lowest since March 2009. – (Reuters/Bloomberg)