* 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
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
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
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
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.