*

STOXX 600 records 5.9% annual rise

*

DAX leads in 2024, CAC 40 lags

*

Eyes on rates, Trump in 2025

(Updates after markets close)

By Sruthi Shankar and Shashwat Chauhan

Dec 31 (Reuters) - European stocks recorded their worst

quarterly showing in more than two years on Tuesday, as

uncertainty around interest rates and the Trump administration's

policies halted a rally that had pushed several markets to

record highs this year.

The pan-European STOXX 600 added 0.6% on the final

trading session of the year, but clocked a quarterly decline of

about 3% - its biggest since July 2022.

Trading volumes were thin ahead of the New Year holiday,

with bourses in Germany, Italy and Switzerland already closed on

Tuesday. Those in France, Spain and the UK had an early close.

"The cautious mood aligns with global trends, as investors

pare back positions ahead of the New Year amid uncertainty over

monetary policy and the economic outlook under a Trump

presidency," said Matt Britzman, senior equity analyst at

Hargreaves Lansdown.

High valuations, climbing Treasury yields and uncertainties

about 2025 have all contributed to the risk-off sentiment in the

past few sessions on both sides of the Atlantic but the main

U.S. indexes have posted strong gains this year.

The S&P 500 has climbed nearly 24% in 2024 while the

STOXX 600 is up just 5.9% as slowing European and Chinese

economies, automakers' troubles and France's political turmoil

weighed on the mood.

German stocks outperformed broader European markets

this year with a near-19% jump, while political instability and

concerns about a widening fiscal deficit dragged down France's

CAC 40 by 2.1%.

European shares had hit an all-time high in September,

riding on the coattails of an AI-driven surge on Wall Street and

supported by interest rate cuts from the European Central Bank.

The UK's FTSE 100 advanced 5% in 2024, its fourth

consecutive year of gains.

Sector-wise, banks and insurers led the surge this

year, while food and beverage stocks and automakers

underperformed.