Closing on a difficult year

US shares closed slightly weaker on Thursday, ending a year in which the S&P 500 recovered by 23.5 per cent.

Claims for unemployment insurance in the US fell by more than expected in the latest week, down by 22,000 to a 17-month low of 432,000. But there was a surprise downward revision to the Chicago purchasing managers index reading for December. The data out on Wednesday was revised from 60.0 to 58.7. Meanwhile China's manufacturing index hit a 20-month high in December, lifting from 55.2 to 56.6.

In a speech delivered overnight, US Federal Reserve chief Ben Bernanke said the Fed had a "very robust strategy" to remove monetary policy stimulus.

European shares finished higher in thin, volatile trade on Thursday with banks, miners and energy stocks higher. The FTSEurofirst index rose by 0.3 per cent with the UK FTSE up 0.3 per cent and German Dax down 0.9 per cent. European shares rose 25.7 per cent in 2009, the best gain since 1999.

US sharemarkets fell on Thursday as investors elected to take profit at the end of the week, month, and year. At the close, the US Dow Jones index was lower by 120 points or 1.1 per cent with the S&P 500 down 1.0 per cent and the Nasdaq down 22pts or 1.0 per cent. Over the year the Dow Jones rose by 18.8 per cent with the S&P 500 higher by 23.5 per cent and the Nasdaq up 43.9 per cent.

US treasuries fell on Thursday (yields higher) in response to a larger-than-expected fall in US jobless claims. US 10yr yields rose by 4pts to 3.84 per cent with US 2yr yields up 5pts to 1.14 per cent. Over the week US 10yr yields rose by 3pts with US 2yr yields up 17.5pts. Benchmark 10-year notes recorded the worst annual performance since 1999.

Major currencies were generally softer against the US dollar on Thursday. The Euro fell from highs near US$1.4440 to near US$1.4310, ending US trade near US$1.4330. The Australian dollar fell from highs near US90.05c to US89.30c, ending US trade near US89.75c. And the Japanese yen eased from 91.90 yen per US dollar to near JPY93.15, ending US trade near the weakest levels.

US crude oil prices rose on Thursday on expectations that cold weather in the US and Europe would boost demand for heating oil. The Nymex crude oil contract rose by US8c to US$79.36 with London Brent crude down US10c to US$77.93 a barrel. US oil prices rose 78 per cent in 2009, the biggest gain since 1999.

Base metal prices were mixed on the London Metal Exchange on Thursday. Copper, lead and zinc rose up to 1.0 per cent while aluminium fell 0.5 per cent and nickel lost 2.0 per cent. Over the week, copper prices lifted 4.4 per cent while lead rose 3.5 per cent with zinc up 2.8 per cent. Other metals eased modestly. And the price of gold rose on Thursday with the Comex quote up by US$3.70 an ounce or 0.3 per cent to US$1,096.20. Gold rose 24 per cent in 2009.

Ahead: In Australia, the Performance of Manufacturing index is released. In the US, construction spending data and the ISM manufacturing index are scheduled.