* Dollar, gold end 2012 with strong gains
* Sentiment tempered by U.S. budget gloom
SYDNEY, Dec 31 (Reuters) - Several major Asian stock indexes closed on Monday with the strongest annual gains in years, but these were overshadowed by the lack of progress in talks to avert the looming U.S. "fiscal cliff".
Australian shares ended up 14.6 percent in 2012, the best yearly gain since the recovery of 2009. On Monday the benchmark S&P/ASX 200 index fell 22.4 points to 4,648.9, according to the latest data. It rose 0.5 percent to 4,671.3 on Friday, its highest close since June 2, 2011.
Hong Kong shares ended their best year since 2009 hovering near 18-month closing highs on Monday. The Hang Seng Index closed flat at 22,656.9 on the day, ending the session up 22.9 percent on the year, near its highest close since early July 2011.
The Straits Times Index (STI) ended down 0.8 percent at 3,167.78 points, but it has gained 20.6 percent since the start of the year, its best yearly gain since 2009, when it surged 64 percent.
Monday's strong closes came during New Year market holidays in Japan, South Korea, Taiwan, Indonesia, Thailand, the Philippines and Vietnam, with half-day trading in Australia, New Zealand, Hong Kong and Singapore.
Japan's Nikkei 225 ended 2012 trading on Friday up 23 percent, Seoul's KOSPI 200 closed up 9.4 percent on the year, and Taiwan was up 9 percent.
The gains drove the MSCI Asia Pacific ex-Japan's to a 12.6 percent rise this year.
Investors fear these gains may be short-lived as the U.S. Congress and the White House struggle to find compromises that could avert the fiscal cliff - harsh tax rises and spending cuts that take effect from New Year's Day.
S&P 500 futures were up 3.7 points, or 0.3 percent, to 1,387.70 in electronic trading at 0500GMT, but traders said the rise in the futures market did not necessarily bode well for a Wall Street rally on Monday after the cash market and futures markets closed far apart on Friday.
"Hard to predict how or when there will be a deal, but I believe investors will show their displeasure tomorrow by selling stocks if there is no deal," said Mohannad Aama, managing director at Beam Capital Management, an investment advisory firm in New York.
In Washington, Senate Majority Leader Harry Reid said the Senate would resume sitting at 11 a.m. Washington time on Monday (1600 GMT), to continue discussions, but there were still significant differences between the two sides.
The U.S. dollar last stood at 85.78 yen, having retreated from Friday's high of 86.64 yen, which was the greenback's strongest level versus the Japanese currency since August 2010.
As the year draws to a close, the dollar is up about 11.9 percent against the yen, putting it on track for its biggest percentage gain versus the Japanese currency since 2005.
The euro inched up 0.14 percent to 1.323 on Monday. An agreement on the U.S. budget would be viewed as positive for riskier currencies such as the euro and Australian dollar, while a deadlock is deemed positive for the haven and highly liquid dollar.
The Australian dollar was around $1.0383, from $1.0375 in late New York on Friday. It touched a one-month low of $1.0345 last week, but is on track to finish up 1.4 percent this year.
The Aussie dollar was supported by a bounce in iron ore prices , which hit eight-month highs at $139.40. Prices are now up 61 percent from the lows hit in September.
Gold was $1661.34 an ounce by 0525 GMT, up around 6 percent for the year and is on track for a 12th consecutive year of gains on rock-bottom interest rates, concerns over the financial stability of the euro zone, and diversification into bullion by central banks.
U.S. crude futures slipped on Monday for a third consecutive session on the budget crisis, with failure to reach a solution seen likely to cause a large drop in fuel consumption.
U.S. crude for February delivery was $90.83 a barrel by 0525 GMT. Front-month prices are on track to post an 8 percent fall in 2012, after three consecutive annual gains. Brent crude slipped 23 cents to $110.39 a barrel, but is set to post a 2.8 percent year-on-year increase in 2012, up for a fourth consecutive year.