Stocks were nearly unchanged on Friday, the last trading day of a turbulent year, but the S&P 500 looked set to end with a slight gain.

Many market participants stayed on the sidelines, reflecting what is typically ultra-light volume for the year's last session.

Volume this week has been about half the daily average, with many traders away for the Christmas and New Year's holidays. The anemic action has amplified moves in both directions.

The CBOE VIX volatility index <.VIX> is up about 30 percent for the year, the first increase since 2008. The S&P climbed 9 percent at its peak, and dropped 14.5 percent to its bottom.

We've had some big, sharp moves ... and now we're pretty much flat for the year, said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

It's disturbing, and I think most people are predicting it's going to be the same next year. Not exactly a fun market to trade, but it is what it is.

The Dow Jones industrial average <.DJI> was down 27.67 points, or 0.23 percent, at 12,259.37. The Standard & Poor's 500 Index <.SPX> was down 1.61 points, or 0.13 percent, at 1,261.41. The Nasdaq Composite Index <.IXIC> was up 0.66 points, or 0.03 percent, at 2,614.40.

European shares closed up on Friday but recorded their biggest annual drop in three years as debt tensions in the euro zone strained the financial sector and threatened to derail a fragile economic recovery. <.EU>

Global markets have been battered this year by the debt crisis, upheaval in the Middle East, a devastating Japanese earthquake and tsunami as well as a struggling U.S. economy.

The S&P is up 0.4 percent, while the Dow has gained 6.1 percent as investors sought safety in large-cap dividend-paying names. The Nasdaq is down 2.4 percent.

Defensive sectors like utilities outperformed growth sectors, underscoring the view that investors were concerned about the economic outlook.

Financials <.GSPF> were the weakest group this year, falling 18 percent, as the concerns about global growth threw into doubt banks' ability to grow profits. Bank of America Corp was the Dow's worst performer, tumbling 59 percent. JPMorgan Chase & Co slumped 21 percent.

Cabot Oil & Gas Corp was the only S&P component to double in 2011, up 103 percent, followed by another energy name, El Paso Corp , which rose 92 percent.

McDonald's Corp advanced 31 percent, the biggest gainer on the Dow.

For a graphic on 2011 market performance, see:

http://graphics.thomsonreuters.com/11/12/US_YEAREND1211_SC.html

Investors may have become too panic-stricken, some analysts said.

Most of the Italian debt gets rolled over in the first quarter ... Once that debt's rolled, if it's rolled successfully, then there isn't any more to talk about on this subject we've beaten to death for over a year now, said Ken Fisher, chief executive of Fisher Investments.

For the session, Ford Motor Co shares rose 0.4 percent to $12.72 after the automaker said U.S. vehicle sales topped 2 million this year for the first time since 2007, implying a 15 percent share in the second biggest auto market in the world.

Composite volume was at 1.62 billion on the New York Stock Exchange, the Nasdaq and Amex, lighter-than-normal for midday.

Advancers led decliners on the NYSE by about 4-to-3 on the NYSE, while on the Nasdaq, they were about even.

(Reporting by Caroline Valetkevitch; additional reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)

S&P Nyse Earthquake Dow jones