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NEW YORK (Reuters) - The dollar, oil and U.S. stocks slipped on Friday in thin pre-holiday trading on the last trading day of 2016, but ended the session with sizable gains for the year.
The dollar logged its fourth straight year of gains against a basket of major currencies, while oil prices notched up their biggest annual gain since 2009.
Global markets have fared surprisingly well in a year marked by major political shocks, including June's vote for Britain to leave the European Union and the unexpected election of Donald Trump as U.S. president in November.
MSCI's world index .MIWD00000PUS, which tracks shares in 46 countries, rose 5.6 percent for the year, its best performance in three years.
On Friday, the index retreated 0.04 percent as weakness on Wall Street ate into earlier gains in Asia and Europe.
"It's been such a significant run-up that there's been a pause," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
The Dow Jones Industrial Average .DJI fell 57.18 points, or 0.29 percent, to end at 19,762.6, the S&P 500 .SPX lost 10.43 points, or 0.46 percent, to close at 2,238.83 and the Nasdaq Composite .IXIC dropped 48.97 points, or 0.9 percent, to finish at 5,383.12.
The pan-European STOXX 600 index ended the session up 0.3 percent. For the year, the index finished down 1.2 percent, its first annual loss in five years.
The dollar index .DXY, which measures the greenback against a basket of six major rivals, gained about 3.7 percent for the year, even as the euro briefly climbed nearly two full cents in overnight trading to $1.0651, its highest since Dec. 14.
The dollar has rallied hard since the Nov. 8 U.S. presidential election on expectations that President-elect Donald Trump's plan to boost fiscal stimulus would benefit the currency. A faster projected pace of rate hikes from the Federal Reserve next year also helped the rally.
Still, doubts linger about how much dollar appreciation a Trump White House will tolerate.
"Much depends on how the Trump presidency and the Chinese economy work out," said Marshall Gittler, chief market analyst for retail broker FX Primus.
Oil prices settled little changed on Friday but attained their biggest annual gain in seven years after OPEC and other major producers agreed to cut output to reduce a global supply overhang that has depressed prices for two years.
Brent rose 52 percent this year and WTI climbed around 45 percent. On Friday, Brent crude LCOc1 settled down 3 cents, or 0.05 percent, at $56.82 a barrel, and U.S. crude CLc1 settled down 5 cents, or 0.09 percent, at $53.72.
U.S. Treasury debt yields closed lower in a shortened session, falling for a third straight day to end a weak fourth quarter with a modest consolidation and round out a year of surprises.
Treasury bonds were the worst performing fixed-income asset this year by a wide margin, vastly underperforming both U.S. investment grade and high-yield corporate bonds and federally backed mortgage securities.
The sell-off during the year's final quarter was due largely to Trump's election victory, analysts said, and the expectation of looser fiscal policy and rising interest rates based on his campaign promises of increased infrastructure spending and tax cuts.
Benchmark 10-year Treasury notes US10YT=RR rose 8/32 in price to yield 2.446 percent.
Precious metals had a strong year, with gold XAU= rising 8.5 percent, snapping a three year losing streak. Palladium XPD= was the best performer, up more than 21 percent in 2016.
Reporting by Saqib Iqbal Ahmed; Additional reporting by Sam Forgione and Lewis Krauskopf; Editing by James Dalgleish