Stocks edged lower on Friday, the last trading day of 2011, as investors waited for next year to begin making large bets.

With the S&P 500 on track for a slight gain for the year after returning to positive territory on Thursday, many market participants were expected to stay on the sidelines on what is typically one of the lowest-volume sessions of the year.

Volume this week has been about half the daily average, with many traders away for the Christmas and New Year's holidays. The anemic action has amplified moves in both directions.

We might get some volatility towards the end of the day as people position for next year, but it will otherwise be slow and quiet with light volume as people wait until next week, said Tom Donino, co-head of trading at First New York Securities in New York.

The Dow Jones industrial average <.DJI> was down 13.17 points, or 0.11 percent, at 12,273.87. The Standard & Poor's 500 Index <.SPX> was off 0.85 points, or 0.07 percent, at 1,262.17. The Nasdaq Composite Index <.IXIC> dipped 0.21 points, or 0.01 percent, at 2,613.53.

Ford Motor Co said U.S. vehicle sales topped 2 million this year for the first time since 2007, implying a 15 percent share in the second biggest auto market in the world. The stock fell 0.4 percent to $10.73.

China's factory activity shrank again December as demand at home and abroad slackened, a purchasing managers survey showed Friday, reinforcing the case for pro-growth policies from Beijing.

Concerns about a hard economic landing in China have been on investor minds throughout 2011 and could linger into next year. Shares in Hong Kong and China had their worst year since 2008.

Global markets have been battered this year by Europe's debt crisis, upheaval in the Middle East, a devastating Japanese earthquake and tsunami as well as a struggling U.S. economy. The S&P is up 0.4 percent, while the Dow has gained 6.1 percent as investors sought safety in large-cap dividend -paying names. The Nasdaq is down 2.4 percent.

Volatility was high throughout the year, with the S&P climbing 9 percent at its peak, and dropping 14.5 percent to its bottom. The CBOE Volatility index <.VIX> was up about 29 percent this year.

Equities may continue a trend followed for much of 2011, taking a cue from European markets. Mixed results from a recent auction for Italian bonds reignited worries about the region's debt crisis. European shares rose 0.6 percent Friday but were on track for their worst year since 2008. <.EU>

Financials <.GSPF> were the weakest sector of the year, falling 18 percent, as the concerns about global growth threw into doubt the group's ability to grow profits. Bank of America Corp was the Dow's worst performer, tumbling 59 percent. JPMorgan Chase & Co slumped 21 percent.

Cabot Oil & Gas Corp was the only S&P component to double in 2011, up 103 percent, followed by another energy name, El Paso Corp , which rose 92 percent.

McDonald's Corp advanced 31 percent, the biggest gainer on the Dow.

Among S&P sectors, defensive groups performed the best, with utilities <.GSPU>, consumer staples <.GSPS> and health care <.GSPA> the top three gainers, all climbing more than 10 percent.

(Reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)

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