* FTSEurofirst 300 up 0.3 pct in last session of the year
* Benchmark index rose 13 pct in 2012, best year since 2009
* Bold central bank moves sparked sharp rally in H2
* U.S. investors continue to pile up European stocks -EPFR
By David Brett and Blaise Robinson
LONDON, Dec 31 (Reuters) - European equities ended slightly
higher in the final trading session of 2012, a year that saw a
sharp rebound in the region's stocks as bold measures from
central banks soothed fears of a break-up of the euro zone.
With just a few hours remaining before the deadline in U.S.
budget talks, however, investors were unwilling to take on much
risk, keeping trading volumes to extremely low levels.
French, Dutch, Spanish and UK markets only traded for half
the session ahead of the New Year Holiday, while those in
Germany, Italy, Austria, Denmark, Norway, Sweden and Switzerland
The FTSEurofirst 300 ended the year at 1,133.96
points, up 0.3 percent on the day and posting an annual gain of
13.2 percent, its best year since the sharp bounce of 2009.
The euro zone's blue chip Euro STOXX 50 index
ended the year at 2,635.93 points, up 0.4 percent on the day and
recording a gain of 13.8 percent for 2012.
Hopes were fading, however, for any sort of broad U.S.
fiscal deal when Congress comes back later on Monday, with only
a few hours of legislative time scheduled in which to act if an
agreement materialises to avert the massive tax hikes and
spending cuts set to come into force automatically in January.
Most of the few traders still at their desks on Monday had
already closed their positions heading in to the year end, and
financial markets are largely anticipating that U.S. politicians
will compromise eventually, given the damage the automatic
measures would do to the U.S. economy.
"There are very few deals being done and there are few
sellers out there with most of us having flattened our positions
in the build up to Christmas," a London-based trader said.
"Emphasis is shifting from prevention towards retrospective
measures in the United States, but it will be interesting to see
how Wall Street reacts and what happens when traders get back to
their desk in the new year," he said.
BULLISH SECOND-HALF 2012
The Eurofirst 300 closed the month of December with a gain
of 1.3 percent, the index's seventh straight monthly gain, its
longest streak of positive months since 1999.
Central banks' commitment to stabilising the financial
system and attempting to boost growth have favoured beaten-down
equities. The main catalyst has been European Central Bank
president Mario Draghi's promise to do whatever it takes to save
With euro zone risks fading and investors becoming more
confident in stock picking, European equities have seen the
return of positive inflows since July, data has shown.
In the week that ended on Dec. 26, Europe equity funds took
in fresh money for a fifth week in a row and in 11 of the past
16 weeks, according to EPFR Global data.
The appetite from U.S. investors has been strong, with
U.S.-domiciled Europe equity funds carrying an inflow streak
stretching back to mid-August, according to EPFR.
After suffering an 84 percent plunge between October 2009
and June this year, Athens's benchmark index posted a
gain of 33.4 percent for 2012, the best performance among
European benchmarks and outpacing Germany's DAX, up
The Spanish and UK equity markets were the laggards in 2012,
with Madrid's IBEX down 4.7 percent on the year and
London's FTSE 100 up only 5.8 percent, outpaced by
France's CAC 40 index <.FCHI, which gained 15.2 percent and
Italy's FTSE MIB, up 7.8 percent.