In the last 12 months, investors overlooked high oil prices, geopolitical uncertainty and economic imbalances to drive leading indices to levels last seen in the champagne-fueled years at the turn of the century.

In New York, the Dow Jones blue-chip index rose above 12,500 points for the first time in its history in the final week of 2006. In London, Paris and Frankfurt leading indices hit their highest levels since shortly before the dot-com collapse.

Markets in Asia have shown similar remarkable performances, with Hong Kong's key Hang Seng index breaking through 20,000 points for the first time on Thursday, and posting a gain of 34.2 percent for the year.

The leading index in Shanghai gained 130.47 percent, while Mumbai's Sensex rallied 47 percent. Only Tokyo has disappointed, with a rise of just 1.9 percent for the broad Topix index, although the Nikkei gained 6.9 percent.

The S and P Global 1200 index, compiled by the ratings agency Standard and Poor's using the biggest stocks from 30 different exchanges, showed a gain of some 19 percent this year.

The exuberance of 2006 can be attributed to a number of factors, foremost among them the strong performance of the global economy this year, the fourth consecutive year of expansion.

The blue-chip Dow Jones index finally recouped its losses and broke the record highs set before the dot-com collapse that began in 2000. It rose 16.3 percent to end the year at 12,463.15, just off a record high set earlier in the week.

The broad-market Standard and Poor's 500 index climbed 13.6 percent and the Nasdaq 9.5 percent on the year.

"The strong gain this year was a direct result of superb profit growth," said Dick Green of research firm Briefing.com.

"Operating profits on the S and P 500 are on target for 16 percent growth for 2006 (through fourth quarter estimated earnings). The profit rise drove the index up a similar amount."

Al Goldman at AG Edwards said the rally may not be over.

"The market is doing fine," he said. "We've had a very substantial rally since mid-July and profit taking is very modest, which seems to say that the momentum is still upward."

Part of the positive trend for the market was due to a strong global economy.

Investment and development in China and India coupled with the ongoing strength of the US economy is forecast to produce growth in global gross domestic product (GDP) of 4.9 percent this year, according to the International Monetary Fund.

The global expansion has enabled large companies quoted on the world's biggest stock markets to return high profits and promise further growth in 2007.

An energy boom fueled by record high oil prices, which hit an all time record of 78 dollars per barrel in July, has boosted the share prices of heavyweight oil companies.

It has also led to high levels of spending by oil-producing countries, which are believed by analysts to have invested part of their oil "petrodollars" in foreign equities.

Added to rosy growth and high levels of liquidity, 2006 also marked an record year for mergers and acquisitions, partly due to increased activity by investment funds.

"Stock markets have benefited from company results that were largely better than expected, of the pause in US monetary policy and a financial context which is still very favorable," said an analyst at French brokerage Credit Mutuel CIC, Valerie Plagnol.

"The quantity of mergers and acquisition also helped to underscore the upwards trend," she added.

The value of corporate acquisitions rose 30 percent in 2006 from 2005 to set a new record, according to data from Thomson Financial, reaching 3.6 trillion dollars over 12 months.

There remain clouds hanging over the global economy however, most notably from the US trade and current account deficits, but also overheated property markets in many developed countries and high levels of consumer indebtedness.

The gains have not been universal either, with Middle Eastern markets Dubai, Qatar and Saudi Arabia sharply lower over the year. Tha main Saudi index tumbled 52.5 percent for the year.

But key emerging markets were robust, with Mexico's Bolsa index up 48.6 percent and Brazil's Bovespa rising 32.9 percent.