(Reuters) - Japan's leading share average ended higher on Friday but marked a 17 percent loss for 2011, a tumultuous year in which massive natural disasters triggered a nuclear crisis and Europe's debt turmoil drained volumes, leaving investors uncertain of a turnaround next year.     

Tokyo Electric Power Co seesawed in volatile trade,edging up 0.6 percent following four sessions of losses after
the trade minister urged the utility to consider de facto nationalisation in the face of massive costs due to radiation leaks at its Fukushima Daiichi plant.    

The utility, known as Tepco, has shed more than 90 percent of its value this year after the March 11 earthquake and tsunami wrecked the Fukushima plant, causing reactor meltdowns and mass
evacuations.
      
There was the earthquake, the Thai floods and the European sovereign debt crisis. It's difficult to say investors will rush back into equities next year, and as things stand it's hard to see a clear theme for the market to rally round, said Toshiyuki Kanayama, a senior market analyst at Monex Inc.   

The Nikkei edged up 0.7 percent to 8,455.35 on the back of a recent run of positive economic data out of the United States, although it failed to top its closely watched 25-day moving average near 8,479.   

The broader Topix added 0.9 percent to 728.61.
     
Volume was thin on the last trading day of the year, with just 838.7 million shares changing hands on the main board, up only slightly from a seven-year low hit this week.    

Italy's long-term debt sale on Thursday saw lucklustre demand even after the European Central Bank offered cut-rate loans to banks earlier this month in an effort to entice buyers
to debt of struggling euro zone countries.   

Without more specifics of the European Stability Mechanism and a significant increase in Europe's bailout facility, it's difficult to see a positive outcome for Europe's massive debt issuance early next year, said Masayuki Otani, chief market analyst at Securities Japan. It's hard to see the tide moving back to equities early next year with so much uncertainty in Europe.

For the year, the Nikkei shed 17.3 percent and the Topix fell more than 18 percent, marking the second straight year of losses and the worst since 2008.    

By comparison, the S&P 500 has gained 0.4 percent this year and Europe's FTSEurofirst 300, at the centre of the
region's debt crisis, has declined 11.5 percent.   

Despite this year's steep drop, the Topix is only slightly cheaper than the S&P 500. It carries a 12-month forward
price-earnings ratio of 11.4, compared with the U.S. index's 11.7.   

Japan can expect solid growth from reconstruction spending next year, but any gains in the market will be challenged by factors out of Europe, said Kenichi Hirano, operating officer at Tachibana Securities.   

Market participants are looking to sectors such as infrastructure, home building and building materials, citing expected reconstruction demand after the events in March devastated large areas of the northeast coast.   

The Topix construction subindex is up 4.1 percent this year, outperforming the broader market.   

Securities and high-tech companies recovered some recent losses on Friday, although Japan's heavyweight stocks tumbled in a year of disasters and corporate scandal. Floods in Thailand pressured Japanese automakers and tech companies, already struggling with the strong yen.   

Nomura Holdings, Japan's No.1 brokerage, sank 54.8 percent this year and touched a 37-year low in November after it posted its first quarterly loss in 2 1/2 years and tripled a cost-cutting target to $1.2 billion.   

Olympus Corp finished the year with gains after dropping nearly 60 percent since ousted CEO Michael Woodford first blew the whistle on a $1.7 billion accounting scandal.    

Trading house Marubeni Corp added 2 percent after it signed a $1.7 billion contract with Kazakhstan's oldest oil refinery on Thursday to produce cleaner fuels.    

Marubeni outperformed rivals Mitsui Co Ltd, which rose 1.2 percent, and Mitsubishi Corp, up 0.8 percent. The Tokyo market will re-open on Jan. 4.

Meanwhile, Asian stocks in other marekts 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 is down more than 18 percent this year, on track for its first annual loss since 2008.

Australia's S&P/ASX 200 index, down 14 percent this year, is poised for its first back-to-back loss in 30 years, while Japan's Nikkei and Topix 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 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 Ramya Venugopal and by Victoria Thieberger in Melbourne.)

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