* World stocks edge up after huge losses for year
* U.S. Treasury yields remain near 50 year lows
* U.S. dollar Wall Street sees best year since 2005
(For winners and losers of 2008, double click [])
By Clive McKeef
NEW YORK, Dec 31 (Reuters) - World stock markets ended on
an uptick for the year on Wednesday, after some bourses
registered their worst annual losses in history.
Global stocks as measured by the MSCI world index
<.MIWD00000PUS> ended up 0.76 percent for the day and posted
their first monthly gain in seven months, but lost 43.36
percent for the year.
About $14 trillion in market capitalization was erased from
world stock markets in 2008 in the wake of the worst credit
crisis since the Great Depression of the 1930s.
"It has been a shocking year, hardly anything was spared in
the carnage," said Michael Heffernan, strategist at Austock
Group in Australia.
U.S. stocks edged up on Wednesday and saw their first
monthly gain in five months, but the year has been the worst
for Wall Street stocks since the Great Depression.
Continuing weekly U.S. jobless claims remained at their
highest level since 1982 in Labor Department data on Wednesday,
but investors took some heart from confirmation by the Federal
Reserve on Tuesday that it would try to lower home mortgage
rates further by buying mortgage bonds in 2009.
Interest rates on U.S. 30-year fixed-rate mortgages dropped
for a ninth consecutive week, reaching their lowest level in 37
years, with the 30-year fixed rate at 5.10 percent, according
to home funding company Freddie Mac on Wednesday.
The worst global credit crisis since the 1930s began with
the bursting of the U.S. house price bubble in 2007, which
resulted in more than $500 billion of losses on
mortgage-related securities for U.S. banks alone.
The U.S. Treasury and the Fed have been trying to stabilize
the housing market by recapitalizing banks and lowering
mortgage rates, while President-elect Barack Obama has proposed
a huge fiscal stimulus package of more than $500 billion in
2009.
"There is general optimism that the new administration will
come forth with some policies that are going to help," said
Peter Jankovskis, director of research at OakBrook Investments
LLC in Lisle, Illinois.
The Dow Jones industrial average <> ended up 108.00
points or 1.25 percent, at 8,776.39. The Standard & Poor's 500
Index <.SPX> finished up 12.61 points, or 1.42 percent, at
903.25. The Nasdaq Composite Index <> closed up 26.33
points, or 1.70 percent, at 1,577.03.
The benchmark S&P 500 index has recovered about 18 percent
since hitting an 11-year low on Nov. 20, but for the year saw
its biggest annual fall since 1937: 38.49 percent.
European shares closed higher in holiday-thinned trade on
Wednesday, with the FTSEurofirst 300 <> index of top
European shares up 0.9 percent at 831.97 points -- while
slumping 45 percent in 2008.
The DJ Stoxx basic resources index <.SXPP>, home of
Europe's biggest mining companies, was the worst hit in 2008,
sinking 64.9 percent, closely followed by the DJ Stoxx banking
index <.SX7P>, down 64.8 percent.
In Japan the Nikkei stock average fell 42 percent in 2008,
the worst loss in its 58-year history, though the benchmark
index gained 1.3 percent on its final half-day of trade.
"Everyone's pinning their hopes on economic stimulus
policies by the United States and possibly China, which is
keeping the market supported for now," said Tomomi Yamashita, a
fund manager at Shinkin Asset Management.
BOND YIELDS AT LOWEST IN DECADES
U.S. Treasuries prices slid on Wednesday as the stock
market continued to edge higher, removing some of the need for
a safe haven, despite the poor economic outlook.
Benchmark 10-year notes <US10YT=RR> fell 1-19/32, with
their yield rising to 2.22 percent from 2.06 percent on
Tuesday.
However, three-month U.S. Treasury bills continue to yield
close to zero percent and longer-dated U.S. Treasury yields
remain at 50-year lows, after the global credit crisis drove
investors out of stocks and sparked a massive flight to the
safety of government bonds worldwide.
European bond markets were already closed for the year on
Wednesday after two-year and 10-year euro zone government bond
yields fell to their lowest levels in nearly two decades on
Tuesday, the last trading day of the year, capping bumper
annual returns due to the grim economic outlook.
U.S. DOLLAR BENEFITS
The U.S. dollar rose on Wednesday and was headed for its
first yearly gain against the euro since 2005 as the financial
crisis led investors to take refuge in the relative safety of
the greenback.
The dollar was on track to end 2008 higher against most
major currencies.
The Japanese yen was the other top performer this year,
boosted by investors unwinding trades financed by borrowing the
Japanese currency at low interest rates.
Despite its rally against higher-yielding currencies such
as sterling and the Australian and New Zealand dollars, the
U.S. dollar has tumbled more than 18 percent against the yen
this year, while the euro was 22 percent lower against the
yen.
The U.S. dollar closed steady around 90.63 yen <JPY=> on
Wednesday with the euro <EUR=> down around $1.3967.
"In forex, the year could be summed up in two words: risk
aversion," said Dustin Reid, director for FX strategy at RBS
Global Banking & Markets in Chicago. "And the yen and the
dollar were at the receiving end of that global flight to
safety."
The U.S. dollar index <.DXY> was up 0.7 percent at the
close in New York, after a 6.0 percent drop for the month, but
ended up about 5.8 percent for the year.
COMMODITIES STEADY AFTER CRASH
U.S. crude oil futures rose sharply on Wednesday with the
expiry of January heating oil and gasoline futures contracts,
and with no end to the attacks in Gaza raising the possibility
of geopolitical risk over the holiday.
NYMEX February crude oil futures ended up $5.57 at $44.60 a
barrel, but crude oil prices have crashed 77 percent in the
past five months, going from a record high of $147.27 in July
to a low of $32.40 on Dec. 19.
Overall, commodities from oil to copper closed out their
worst year ever on a flat note on Wednesday.
"In the new year, President-elect Obama will be taking on
his new position, and many people will be expecting a number of
changes to stimulate the U.S. economy," said Adrian Koh,
analyst at Phillip Futures in Singapore.
(Additional reporting by Jeremy Gaunt and Brian Gorman;
Editing by Jonathan Oatis)
