Asian stocks nudged higher and the euro clung to overnight gains on Friday, the last trading day of 2011, as positive data from the United States helped allay concerns on the global economy, while year-end short covering lifted crude prices.
Still, the region's stocks have collectively lost about a fifth of their value this year, as natural calamities and financial turmoil took a toll on the risk appetite of investors, driving them to safer assets such as the U.S. dollar and gold.
The MSCI index of stocks outside Japan <.MIAPJ0000PUS> is down more than 18 percent this year, on track for its first annual loss since 2008.
Australia's S&P/ASX 200 index <.AXJO>, down 14 percent this year, is poised for its first back-to-back loss in 30 years, while Japan's Nikkei <.N225> and Topix <.TPX> have lost 18 percent and 19 percent respectively.
If you look around at all the asset classes, it really has been a year of safe-haven flows, it is about preserving your capital and returning your equity, said Chris Weston, institutional dealer at IG Markets in Melbourne.
Investors were spooked in 2011 by an earthquake and tsunami in Japan, which was followed by debt crises in the United States and Europe and floods in Thailand.
On Friday, the mood was cautiously upbeat after U.S. data on Thursday pointed to positive trends for the world's biggest economy and triggered modest gain in U.S. and European stocks.
The MSCI ex-Japan index was up 0.2 percent, while the Nikkei was up 0.4 percent on the day.
Pending sales of existing U.S. homes surged to a 1-1/2-year high in November and factory activity in the U.S. Midwest grew more than expected in December.
The euro also benefited from the data which offset euro zone worries, and offered support to risky assets.
The dollar index <.DXY> retreated from a one-year peak of 80.854 to 80.410 and the euro bounced off a 15-month low of $1.2856 to $1.2951.
Market focus is now on HSBC's China manufacturing activity report for December due at 0230 GMT. A preliminary purchasing managers' survey released earlier in the month showed China's factory output shrank again in December after new orders fell.
Crude oil held on to overnight gains as the rise in the stock market and short covering helped shake off early losses caused by a rise in U.S. crude stockpiles.
US crude was up 0.5 percent, while Brent was up 0.1 percent.
The focus remained on Iran after Tehran again threatened to block traffic through the Strait of Hormuz, a crucial passage for Middle Eastern crude suppliers after the European Union's decision to tighten sanctions on Iran over its nuclear programme. The United States said it would preserve oil shipments in the Gulf.
(Additional reporting by Victoria Thieberger in MELBOURNE; Edited by Ron Popeski)
(Corrects to say Australian stocks headed for first back-to-back loss in 30 years, not annual)