LONDON: European stocks rose Tuesday before the New Year break, capping a year of bumper gains on the back of growing economic optimism and easier monetary policy from top central banks.

In late morning deals, London's FTSE 100 index advanced 0.36 per cent to 6,755.79 points and the Paris CAC 40 won 0.25 per cent to 4,286.60, on the final trading day for both bourses before shutting for New Year's Day.

“In today's shortened session, the FTSE is moving higher as traders prepare to pop the champagne corks,” said analyst David Madden at trading firm IG.

“Not only will they be celebrating in honour of New Year's Eve, but also because 2013 has been a stellar year for the stock market.”

Frankfurt's DAX 30 was closed on Tuesday, one day after falling 0.39 per cent to finish the year at 9,552.16 points.

Over the course of 2013, however, Frankfurt stocks soared by a staggering 25.5 per cent, striking a series of record peaks. The British and French markets are on course for annual gains of about 15 per cent in value.

Stocks have been boosted this year by the upbeat global economic outlook, low interest rates and central bank stimulus policies.

“Markets have been propped up by looser monetary policies and stimulus from the US Federal Reserve, Bank of England, Bank of Japan and European Central Bank, as investors take advantage of the ample supply of liquidity being pumped by these central banks,” ETX Capital trader Ishaq Siddiqi told AFP.

He added that the “low interest rate environment for US, UK and eurozone means the atmosphere in general is seen as accommodative, allowing risk appetite to build”.

In addition, sentiment was bolstered after the Fed decided earlier this month to scale back its stimulus, sparking hopes that the US economy was back on track.

Across in Asia on Tuesday, equities mostly rose on the last day of 2013, after another record-breaking session on Wall Street.

Dealers also drew strength from the Dow's record close overnight on Wall Street, with the market jumping 0.16 per cent to register its fourth all-time high in the past five sessions and the 51st of the year.

The Dow Jones Industrial Average rose 0.16 per cent to close at a record 16,504.29 points on Monday.

The Dow has risen about four per cent since the Fed announced on December 18 that it plans to scale back its stimulus in January, boosting hopes over the health of the world's biggest economy.

“Clearly, the Federal Reserve's decision to begin scaling back its quantitative easing program a couple of weeks ago is still providing investors with the confidence to buy into the rally,” added Alpari analyst Craig Erlam.

The Hong Kong stock market meanwhile added 0.26 per cent to close at 23,306.39 points – putting on 2.87 per cent in 2013. Sydney was flat but closed the year more than 15 per cent higher.

Shanghai added 0.88 per cent. However, the Chinese market finished down 6.75 per cent for 2013, making it one of the world's worst performers.

Tokyo, Manila, Seoul, Bangkok and Jakarta were closed for the holiday.

While Japan's Nikkei closed Monday with a 57 per cent advance over the year – its strongest performance in four decades making it the world's best performer – Shanghai ended a torrid 2013 that saw it suffer two liquidity crises.

In June and again in December, a cash crunch in China's financial markets fuelled worries about the economy, which was already suffering a slowdown that had knock-on effects for other nations dependent on Beijing for growth.

Tuesday's modest advance had followed a pledge by the central bank, the People's Bank of China, to maintain an “appropriate” level of liquidity.

Back in London on Tuesday, the greenback was pressured by data showed US pending home sales rose 0.2 per cent in November. That was the first rise in five months but below forecasts of a 1.5-per cent gain.

The dollar dipped to 105.02 yen, from 105.11 yen late in New York on Monday, when it had rallied as high as 105.41 yen -- the strongest level since October 2008.

The European single currency eased to $1.3767 from $1.3800 late in New York on Monday.

The euro was lower at 83.23 pence, while the British pound gained to $1.6542 – not far from last week's two-year high.

Gold slid to $1,201.43 an ounce on the London Bullion Market on Tuesday, from $1,204.50 on Monday.