LONDON, Dec 31: World stocks brought down the curtain on a miserable year with modest gains on Wednesday but 2008 will be remembered for key markets shedding half their worth as the global economy endured a disastrous slowdown.

Despite a number of bourses gaining some ground over the past few days, the overall picture for 2008 has been one of gloom as the worst economic crisis since the 1930s tore into investor confidence and battered equities.

In morning European trade Wednesday, London was up 0.84 per cent and Paris gained 0.76 per cent. However both markets, due to shut early ahead of New Year celebrations, were set to record massive annual losses.

Equity markets are set to finish this rather disastrous year with something of a flourish, said CMC Markets dealer Jimmy Yates.

Whether this is Santa’s rally or simply testament to the volatility that has characterised the year will doubtless be a point to debate in the months to come, Yates added.

US stocks revved higher Tuesday ahead of their final 2008 session Wednesday after a government rescue announced for finance firm GMAC and its former parent General Motors boosted hopes for a recovery in the troubled US auto sector.

Wall Street’s firmer showing gave a boost to those Asian markets still open, which then carried on into European hours.

Frankfurt ended its year on Tuesday, closing with a daily gain of 2.24 per cent. During 2008 however, the German bourse shed a massive 40 per cent -- a pattern mirrored elsewhere.

By the close of trade on Wednesday, Hong Kong and Singapore had almost halved in value over the year, Sydney lost more than 40 per cent and Shanghai nearly two-thirds -- the steepest annual loss in the Chinese market’s 18-year history.

Tokyo was 42.12 per cent down and Seoul 40.73 per cent when they closed for the year on Tuesday.

We have not reached the bottom yet. The worst will come when investors start to sell their shares in panic next year, Peter Lai, sales director of DBS Vickers in Hong Kong, told AFP.

Markets have been hammered by the world economic crisis, which was sparked by the collapse of the sub-prime, or high risk, mortgage market in the United States. This led to the US government takeover of mortgage giants Freddie Mac and Fannie Mae in September.

But shares went into a tailspin soon after following the failure of Wall Street banking icon Lehman Brothers under a mountain of debt. Giant insurer American International Group then had to be bailed out by Washington.

A $700-billion rescue package for the ailing financial industry was unable to stop the rot as the US and other leading nations entered recession.

US stocks did manage to end 2008 on a positive note, as the GMAC lead allowed investors to look past data showing consumer confidence falling to an all-time survey low and further declines in US home prices.

The Dow Jones Industrial Average jumped 2.19 per cent as a rally gathered momentum late on Tuesday.

The US Treasury said late Monday it was injecting five billion dollars into auto finance firm GMAC and lending another one billion dollars to General Motors in a move to help stimulate auto loans to boost sales in the sagging sector.

These developments will substantially ease the upward pressure that we have seen on auto loan borrowing spreads, and provide greater access to auto loan credit for American households, said Brian Bethune at IHS Global Insight.

The landmark deal ... is indeed path-breaking in terms of the scale of the response of the Treasury and the Federal Reserve to the economic and financial crisis that has enveloped the US economy.—AFP