Investors troubled by US deadline Most global equities ended a volatile week on a negative tone amid concerns that lawmakers in Washington may not reach a budget deal by the end-of-year deadline, failing to avoid the fiscal cliff of tax increases and budget cuts. The broad measure of US stocks, the S&P 500, wrapped up its fifth sessions of declines. The FTSE All-World index slid 0.4 per cent, while US Treasuries and the dollar index advanced. Trading volume was lighter than usual throughout the week as several markets closed for Christmas holidays in Europe, the US and South America. President Barack Obama summoned a meeting with congressional leaders yesterday afternoon in an effort to resume stalled negotiations on the fiscal cliff. But no progress on the negotiations was reported before the end of the session on Wall Street. Hopes for a budget deal started to fade on Thursday, with congressional leaders pre-emptively issuing statements attempting to shift the blame to each other, a sign that neither Republican nor Democratic leaders saw an agreement on the horizon. Kathy Lien, a managing director at BK Asset Management, said the next couple of days would be crucial for markets: "For the next five days, investors will care about one thing and that is how the US fiscal cliff talks are going. Currencies and equities will hold steady unless there is reason to believe that a deal will not be done by the end of the year or early next year. "If no deal is made by December 31 but Congress pledges to make an announcement in the first two weeks of January, investors may be willing to grant a grace period, but if the talks break down, then selling could ensue," she said. In New York, the S&P 500 closed 1.1 per cent lower on the day at 1,402 points. The benchmark index, which advanced 12 per cent this year, slipped 1.9 per cent this week. The index received little help from data showing an improvement in regional manufacturing conditions and a rise in US pending home sales for the third month in November. The home sales index climbed 1.7 per cent to 106.4, the highest reading since April 2010, according to the National Association of Realtors. "With the [US] housing market at the early stages of a longer-term improvement cycle, historically low mortgage rates and the prospect of a continuing improving economy and job market, albeit only modest growth, supports a steadily improving housing market going forward," said Adrian Miller, director of fixed income strategy at GMP Securities. In Europe, the FTSE Eurofirst 300 closed 0.6 per cent lower as stocks in Germany, UK and France fell. Asian stocks bucked the trend, with Japanese shares posting their biggest annual advance since 2005, on hopes for more central bank asset purchases after a report showed a drop in Japan's consumer prices. On the currency markets, the euro was under pressure after Italian borrowing costs rose at a debt sale and economic data showed France's economy grew less than expected. The single currency traded 0.1 per cent lower at $1.3218 as the dollar index - which measures the value of the US currency against a basket of six US trading partners - touched a two-week high before paring the gains to trade just slightly higher at 79.67. The Japanese yen weakened to a 28-month low versus the US dollar after Japanese consumer prices and factory output fell. "Currency trading in the coming days will clearly be dominated by US budget headlines - we expect choppy trading, with the possibility of foreign currency weakness before year-end followed by foreign currency strength early in the new year," said Nick Bennenbroek, head of currency strategy at Wells Fargo Bank. On the government bond markets, US 10-year Treasury notes posted their first weekly gain in a month, with yields on the benchmark note trading at 1.70 per cent, below their 200-day moving average of 1.74 per cent. The Federal Reserve bought about $5bn of Treasuries yesterday, the last purchase under its Operation Twist programme, which sought to replace short-term Treasuries in the central bank's holdings with longer-term debt to cap borrowing costs. Among commodities, oil fell on the day but still ended the week higher amid reports of declines in US supplies to multi-month lows. Brent oil fell 0.2 per cent to $110.62 a barrel in London, while WTI crude touched $91.32 a barrel in intraday trade on the New York Mercantile Exchange. Prices advanced nearly 3 per cent this week and over 2 per cent this month. Gold futures fell for the first time in three days as a stronger dollar curbed demand for the precious metal as an alternative investment. Gold traded 0.3 per cent lower at $1,660 an ounce, but still up more than 5 per cent this year. Gold prices are set for a 12th straight annual gain, according to Bloomberg data.