American markets are poised to end 2010 with pretty remarkable returns considering how bleak things looked as recently as September. Add in dividends, factor out inflation, and U.S. stocks, broadly speaking, were a good place to invest in 2010. Indeed, one of the broadest measures of U.S. equity performance, the S&P U.S. Broad Market Index, is on track to post a total return of 17% in 2010.

The bullish and bearish forces acting on stocks here at home all year come into even sharper relief when we look at the best- and worst-performing stock markets in the world for 2010. Anything tied to China, the driver of the global recovery with its insatiable demand for commodities, outperformed. Meanwhile, the eurozone debt crisis crushed equities across the Continent and beyond.

Philippines First, Greece Worst

Emerging economies in close proximity to China took three of the top five spots in 2010, according to S&P BMI Global Indexes. By this broad measure, the Philippines was the best-performing equity market in the world this year, returning 58% as of Dec. 24. Thailand and Malaysia likewise benefited from their satellite positions to China. Meanwhile, stocks in the Pacific Rim countries of Peru and Chile soared on record-high prices for gold, silver, copper and other commodities (see chart below).



On the other side of the ledger, the worst markets were the stars of the European debt crisis. Four of the five members of the so-called PIIGS of Europe -- Portugal, Italy, Greece and Spain -- hosted the worst performing equity markets of 2010. Hungary, which had been cooking its books a la Greece, nudged Ireland (the fifth member of the PIIGS), out of the top five. Ireland's stock market, for the record, posted a loss of 8.3% as of Dec. 24, according to S&P (see chart below).


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