Asian shares fell yesterday in low volume with many market players away for year-end holidays, while oil held on to the previous day\'s gains on concerns about possible supply disruptions after Iran threatened to stop the flow of oil from the Gulf. MSCI\'s broadest index of Asia-Pacific shares outside Japan fell 0.9 per cent, keeping it on track for a 2011 loss of 18 per cent, underperforming a 12 per cent decline in European shares and a 9 per cent drop in world stocks. The pan-Asian index was dragged lower by a 1.3 per cent drop in Australian shares, hit by falling gold and copper prices in extremely thin trading. Investors cutting risk before the year-end led Hong Kong and China shares down as turnovers neared year lows. European markets were likely to open lower, with financial spreadbetters expecting London\'s FTSE to start barely changed but Frankfurt\'s DAX and Paris\' CAC-40 to begin down 0.2 and 0.4 per cent respectively. Japan\'s Nikkei stock average ended down 0.2 per cent in light trading, on track for a 17.6 per cent drop this year. \"More people want to bring their positions to neutral ahead of the New Year holidays than look for bargain hunting, and that\'s keeping prices depressed in low volumes,\" said Tetsuro Ii, the president of Commons Asset Management in Tokyo. Dollar index flat The dollar index, measured against a basket of six major currencies, was nearly flat at 79.830. The euro stood at $1.3067, holding above its 11-month trough of $1.2945 hit earlier this month. But it remained vulnerable ahead of Italy\'s debt sale today. The Italian debt sale of up to €8.5 billion (Dh40.78 billion) of debt will provide a gauge of investor appetite. Italy faces around €100 billion in bond redemptions and coupon payments between January and April. The direction of yields on highly-indebted Eurozone sovereigns will remain a market focus in 2012, as a soaring public financing burden threaten to hurt growth and further derail fiscal reforms. In the United States, more data emerged to support views the economy was on track for moderate recovery, with improving labour market conditions lifting US consumer confidence to an eight-month high in December. Other data, however, showed US single-family home prices fell more than expected in October, suggesting recovery was still far from being on a solid footing. Europe must clear several hurdles including government bond auctions and implementing a bailout programme before regaining market confidence about its ability to contain the debt crisis. Growth challenge Once the prospect of resolving the debt crisis becomes clear, it would help improve economic fundamentals in the US and China and boost risk appetite. \"The trend for including commodities in asset allocations will remain intact next year, as you cannot remove resources-related assets from your portfolios,\" said Ii of Commons Asset Management. The 19-commodity Reuters-Jefferies CRB index — largely influenced by US crude oil — was set for a 7 per cent drop in 2011, faring slightly better than equities. US crude oil was among the best performers this year with a 10 per cent increase, while gold gained 12 per cent as a loss of confidence in key currencies such as the euro accelerated flight to bullion, traditionally seen as a safe-haven.