Europe financial crisis is top business story of 2011

NEW YORK - Europe took the financial world on a stomach-churning ride in 2011.

The rising threat of default by heavily indebted European countries spread fear across financial markets and weighed on economies worldwide. As the year came to a close, banks and investors nervously watched Europe's political and financial leaders scramble to prevent the 17-nation eurozone from breaking apart.

1. EUROPEAN FINANCIAL CRISIS. The government-debt crunch rattled Europe's financial system and weighed on the global economy. Portugal became the third European country, after Greece and Ireland the year before, to require a bailout as its borrowing costs soared. And investors grew worried that countries with much larger debts, such as Spain and Italy, would also need help.

2. BAD U.S. ECONOMY: YEAR FOUR. The Great Recession may have ended, but the economic recovery continued to disappoint. For the first six months of the year, the economy grew at an annual rate of just 0.9 percent. Growth improved to a 2 percent rate in the third quarter and a 3 percent growth rate is forecast for the fourth quarter.

3. STEVE JOBS DIES. The college dropout who helped popularize the personal computer and created the iPod, iPhone and iPad, died on October 5. That was two months after Apple Inc., which Jobs started in a Silicon Valley garage in 1976, briefly surpassed Exxon Mobil Corp. as the most valuable publicly traded company in the world.

4. THE U.S. CREDIT DOWNGRADE. The inability of political leaders to come up with a long-term plan to reduce the federal budget deficit led the credit rating agency Standard & Poor's to take away Uncle Sam's sterling AAA credit rating for the first time. The political bickering enraged voters, spooked investors and led to the lowest consumer confidence level of the year. But the nation's long-term borrowing costs fell after the crisis. The reason: U.S. debt still looks safer to investors than almost everything else, especially European debt.

5. RUPERT MURDOCH AND THE HACKING SCANDAL. The man whose worldwide media empire thrives on covering scandal became the center of a dramatic one. A British tabloid newspaper owned by Murdoch's News Corp., which also owns Fox News and The Wall Street Journal, hacked the phone of a murdered schoolgirl. Murdoch was not charged with a crime, but an investigation by British authorities raised questions about Murdoch's ability to run his worldwide media empire. News Corp. fired several executives and closed the newspaper at the center of the scandal, the News of the World.

6. JAPAN EARTHQUAKE. An earthquake and tsunami that crippled the Fukushima Dai-ichi nuclear reactor, owned by Tokyo Electric Power Co., cut off supplies of crucial Japanese parts and idled factories thousands of miles away. Auto companies, especially Toyota and Honda, were hit hardest. Inventory of certain models, especially hybrids, fell short at dealerships, reducing sales and sending retail prices higher.

7. GASOLINE PRICES HIT ANNUAL RECORD. The retail price of gasoline averaged $3.53 per gallon for the year, eclipsing the 2008 record of $3.24 per gallon. Americans drove less and switched to more fuel efficient cars, but it wasn't enough to offset the higher prices. A bigger percentage of household income went into the gas tank in 2011 than any year since 1981.

8. SOCIAL MEDIA IPOs TAKE OFF. Shares of the business social networking site LinkedIn more than doubled when it went public in May, recalling the froth of the dot-com boom. LinkedIn was followed by large IPOs from online radio company Pandora Media, online discount site Groupon and social gaming site Zynga. But the market is treacherous: shares of Pandora, Groupon and Zynga all traded below their offering prices soon after they were listed.

9. OCCUPY WALL STREET. On Sept. 17, several hundred protesters gathered at a small plaza about a block from the New York Stock Exchange. They slept in tents, ate donated meals and protested income inequality and the influence of money in politics. The movement inspired protesters around the world who camped in city centers and business hubs to complain about unemployment, CEO pay and a decline in upward social mobility.

10. THE DOWNFALL OF MF GLOBAL AND JON CORZINE. The former governor, senator and co-chairman of Goldman Sachs lost control of a small brokerage firm he agreed to run in 2010. Saddled with huge debt and risky bets on European bonds, MF Global was forced to file for bankruptcy protection on Halloween after trading partners and investors got spooked.