What will happen to stock markets in 2012

What will happen to stock markets in 2012 ; The FTSE 100 is on course for an 8 per cent fall over the year. That's disappointing - but it's better than the near-25 per cent plunges for Germany and France and actually ranks the UK 9th in a league table of stock market performance for 2011

The stock market volatility during the second half of 2011 had unnerving echoes of the banking crisis in 2008.

One difference between now and then is that some of the bad debt that crippled the financial system then, carried by banks, has been passed on to governments (and their taxpayers). And yet still, European and U.S. banks still have an unquantifiable and potentially lethal level of bad debt.

Debt threatens to bankrupt several southern European countries. Investors hoped a solution could be found. When the stark reality sunk in - during July - that a deal was unlikely, stock markets plunged.

The FTSE 100 endured a torrid week in early August, losing 10 per cent. Wild volatility followed with the FTSE 100 dipping below 5000 points. It hit a low of 4944. It bounced, then had a repeat sell-off later in the month, hitting 4935 on 19 August.

Those lows represented a drop of nearly 20 per cent, down from more than 5900 in July. And the slump handed back nearly all of the gains made in the past year.

Fresh hopes for a rescue package pumped markets back up in late October, with the FTSE 100 surging above 5700 points. The US market had its best month since 1974. But the exuberance evaporated in November and December when a solid plan to save the euro continued to evade European leaders. read more www.thisismoney.co.uk For the latest updates PRESS CTR + D or visit Stock Market news Today

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