Stocks fall as fiscal cliff deadline looms Global stocks were lower on the last trading day of 2012 as US policy makers remained unable to reach a deal to avoid the looming fiscal cliff. Fears that the $600bn of tax increases and spending cuts that are set to come into force in the new year will send the US economy into recession also drove haven buying in dollar and yen assets, while gold climbed. A day before the deadline for a deal, US lawmakers were still locked in negotiations. "With the US budget negotiations still unresolved combined with the political uncertainty in Italy ahead of elections in February, market participants are now expecting a difficult first quarter in 2013 and will greet the new year with worried minds," said Ishaq Siddiqi, market strategist at ETX Capital. In Europe, some markets, including Germany, were closed for the new year, and most of those that were open were only trading till midday. London's FTSE 100 was down 0.4 per cent at 5,900.18 in early trade, while France's CAC 40 slipped 0.3 per cent to 3,611.4. In Asia, Hong Kong's Hang Seng index closed flat at 22,656.92, while Australia's S&P/ASX 200 lost 0.5 per cent to 4,648.9, its first drop in four days as miners and banking stocks lost ground. Chinese shares provided a bright spot, however, after HSBC's China manufacturing PMI survey rose to 51.5 in December from 50.5 in November, the strongest reading since May 2011. The Shanghai Composite index climbed 1.6 per cent to 2,269.13. Most Asian markets, including Japan, South Korea and Taiwan, were shut. In currency markets, the Japanese yen and the dollar found support from investors looking for a safe place to park cash over the new year break. The yen has been on a steady decline since mid-November, falling about 8 per cent since the election of Shinzo Abe as prime minister as investors anticipated an easing in monetary policy. On Monday, the Japanese currency climbed 0.2 per cent against the euro to Y113.45. Support for the dollar, however, was stronger and it climbed 0.1 per cent to Y86.10 against the yen and rose 0.2 per cent versus the euro to $1.3196. Gold was the main mover on commodity markets as investors sought calm amid the volatility elsewhere. Spot gold rose 0.7 per cent to $1,668.85 a troy ounce. Oil prices fell, however, on concerns that a recession in the US would damp demand for petroleum products. Brent crude fell 0.5 per cent to $110.10 a barrel, while Nymex WTI lost 0.2 per cent to $90.60.