European shares down ~0.1% STOXX 600 up over 22% in 2021 London closed early, Frankfurt shut U.S. stock index futures dip Dec 31 - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com STOXX UP 22% IN 2021: BANKS LEAD, TRAVEL LAGS (1317 GMT) The last trading session of the year delivered no surprises with many European bourses already shut since yesterday and the rest closing shop earlier. Volumes and newsflow was thin. The STOXX 600 (.STOXX) ended the day just down slightly and at striking distance from a record high hit last month, scoring a 22% annual gain, its second best year since 2009. In sectors, travel & leisure (.SXTP) was the worst performer but still managed to end the year up around 4%, held down by pandemic restrictions. Banks (.SX7P) jumped to the top spot, up 34%, boosted by the economic recovery and a hawkish turn for monetary policy across the globe. Here"s your last 2021 snapshot. snapshot snapshot (Danilo Masoni) ***** GERMAN-ITALIAN SPREAD? KEEP IN MIND 150 BPS (1050 GMT) The spread between Italian and German government bond yields is among the hot topics in financial markets as former ECB chief Mario Draghi might leave his job as Italian prime minister if he became Italian president in January next year. In the short term, the scenario which would trigger the maximum potential widening of the spread is snap elections; but analysts are inclined to rule that out at the moment. “We think the spread between German and Italian 10-year bond yields is unlikely to widen beyond 150 basis points,” Fabio Castaldi, senior investment manager at Pictet, says. “I believe that investors, especially domestic ones, will look to step in and buy Italian bonds if spreads widen to those levels heading into the election of the next Italian President in January,” he adds. “Italian politics will be a substantial issue for Europe unless it’s clear who will succeed Draghi,” Holger Schmieding, chief economist at Berenberg, says. "I don"t think that Italy is heading for snap elections if Draghi should become president because Draghi as a new president can do a lot to prevent a new vote,” he adds. “The risk is more political uncertainty. I wouldn’t be surprised if the German-Italian yield spread widened by a further 20 basis points in the next few weeks,” he argues. The spread between German and Italian 10-year government bond yields is around 130 bps. DE-ITspread DE-ITspread (Stefano Rebaudo) ***** NO FIREWORKS, SOME M&A (0918 GMT) While the world prepares for New Year"s Eve with COVID-19 casting some gloom over the festivities read more , European markets started their last trading session on a sober note too. Unsurprisingly the STOXX 600 is hardly moving in early deals, firmly anchored around parity and just a couple of points far away from a lifetime peak hit in November, while moves across stocks and sectors were muted. Among the very few exceptions, Hunter Douglas soared 70% to a record high after private equity firm 3G Capital has agreed to buy a controlling stake in the Dutch window coverings group in a deal based on an enterprise value of $7.1 billion. read more The move is the latest curl of a huge dealmaking wave that swept across global markets this year, boosting investment banking activity and spicing up the stock market rally. Global M&A volumes topped $5 trillion for the first time ever in 2021, soaring 64% to $5.8 trillion, per Refinitiv data. read more Reuters Graphics Reuters Graphics (Danilo Masoni) ***** LOW VOL, QUIET LAST DAY OF 2021 (0747 GMT) With bourses either shut of open just half a day in Europe, the session ahead will likely distinguish itself with low volumes and little activity as most investors prepare for year end celebrations away from their trading desks. Frankfurt and Milan are shut today while Paris and London will close earlier. Meantime, FTSE 100 futures pointed to a drop of 0.4%, as sterling hit a 22-month high versus the euro. Overall, the pan-European STOXX 600 equity benchmark is set to end the year up over 22%, its second best year since 2009. The index has risen 82% from the lows hit in March 2020 at the peak of the COVID-19 scare, driven by record growth in corporate profits, supportive monetary policy and vaccinations. snapshot snapshot (Danilo Masoni)