* World stocks on track to end 2010 at 28-month highs
* Dollar weakens for 2nd day; keeps modest gains in 2010
* Gold jumps 30 pct in 2010, silver soars 80 pct
(Updates with European markets close)
By Walter Brandimarte and Sebastian Tong
NEW YORK/LONDON, Dec 31 (Reuters) - World stocks were set
to end 2010 at their highest levels in 28 months as investors
geared up for further risk-taking into 2011, prompted by a
wilting dollar and low yields on U.S. bonds.
Recent figures pointing to stronger momentum in the world's
biggest economy failed to support the greenback, which traded
on Friday at its weakest point in nearly six weeks against a
basket of major currencies.
The weaker dollar supported further commodity gains, with
gold on track to finish the year 30 percent higher -- its
strongest annual performance since 2007. Silver, a cheaper
safe-haven alternative to gold, jumped 80 percent in 2010.
Notwithstanding more upbeat U.S. economic prospects, the
Federal Reserve is expected to keep monetary conditions
ultra-loose to maintain the pace of recovery, which should keep
the dollar on the back foot through the first quarter of 2011.
"In many ways 2010 is ending on a similar note to 2009,
with markets rallying on hopes of economic recovery. This is
certainly in line with our view of the world economy," said
Keith Wade, chief economist at Schroders.
"However, we also recognize that the U.S. is simply kicking
the can down the road by avoiding fiscal consolidation. Markets
are also far more cautious about the scope for policymakers to
remove support than a year ago."
World stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS> drifted up 0.3 percent to their strongest
levels since September 2008 and are on track to end the year 10
percent higher.
The benchmark MSCI index was supported on Friday by
emerging market gains, which offset some profit-taking in U.S.,
European, and Japanese markets.
Asian stocks ended the year 15 percent higher, the prime
beneficiaries of record low interest rates in much of the
developed world.
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For a look at 2010's Asia Markets winners and losers,
please click on:
http://graphics.thomsonreuters.com/F/12/AS_MKTS2010.html
For a look at how BRIC markets have stacked up against
their global peers, please click on:
http://r.reuters.com/vys24r
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European shares closed 7.3 percent higher for the year even
as investors pocketed part of those gains, driving the
FTSEurofirst 300 <> index of top shares 0.6 percent
lower.
Emerging markets stocks rose 0.66 percent on Friday, adding
to gains of 16 percent for the year, according a benchmark MSCI
index <.MSCIEF>
On Wall Street, the three main stock indexes seesawed
around the unchanged mark, leaving the S&P 500 on track for its
best December performance in nearly two decades -- a monthly
gain of 6.6 percent.
For the day, the Dow Jones industrial average <> edged
up 4.47 points, or 0.04 percent, to 11,574.18, while the
Standard & Poor's 500 Index <.SPX> was up 0.53 points, or 0.04
percent, at 1,258.41. The Nasdaq Composite Index <> fell
9.45 points, or 0.35 percent, to 2,653.53.
"We had a nice year, as far as percentage up, really good
numbers for the year," said Terry Morris, senior vice president
and senior equity manager for National Penn Investors Trust
Company in Reading, Pennsylvania. "It's just drifting and it's
entitled to a pullback."
BRUISED EURO
Investors remain fretful about the debt situation in the
European Union after Italy paid higher yields on Thursday to
sell new debt.
Still, the euro <EUR=> jumped 0.86 percent against the
dollar on year-end buying by central banks and real-money
accounts. For the whole of 2010, the European single currency
is set to finish with losses of about 7 percent.
Market confidence in the common currency was bruised this
year by emergency rescues for debt-laden Ireland and Greece.
Investors are now seeking the relative safety of the Swiss
franc, which hovers at a record peak against the euro.
Despite a beating at year-end, the dollar was managing to
finish the year a bit firmer than it began. The greenback fell
0.8 percent against a basket of major currencies on Friday, but
kept gains of 1.3 percent against those currencies for the
year, according to the U.S. Dollar Index <.DXY>.
"We're still facing a lot of uncertainty next year, but the
U.S. economic data is starting to turn for the better, and I
think that will spark dollar gains, particularly against the
yen," said Boris Schlossberg, research director at GFT Forex.
Prices of base commodity prices remained well supported,
with copper ending the year at a record high and oil poised to
gain more than 12 percent in 2010 with an average price of
nearly $80 a barrel -- the second highest on record.
U.S. crude oil prices rose 0.93 percent on Friday to
$90.68 per barrel,
(Additional reporting by Chuck Mikolajczak, Steven C.
Johnson, and Chris Reese in New York; Editing by Andrea Ricci)
