European stock markets started the New Year on a high note yesterday after a tumultuous 2022, with the IMF chief warning that a third of the global economy faces recession in 2023.

The Paris CAC 40 rose more than one per cent and the Frankfurt DAX was up 0.7 per cent but London, Wall Street and oil markets were closed for the holiday.

Most Asian stock markets were also shut. Of those that opened, Jakarta was flat while Seoul fell and Mumbai rose.

Wall Street recorded its worst annual drop since 2008 last year, while Hong Kong had its biggest drop since 2011 and Tokyo saw its first annual fall since 2018. 

Paris and Frankfurt also had their largest annual falls since 2018, while London bucked the trend as it finished almost one percent higher for the year.

Investors were rocked last year by Russia's invasion of Ukraine in late February, soaring inflation and rising interest rates.

Inflation has been fuelled by surging food and energy prices, but European gas prices, which had climbed to a record €345 per megawatt hours in March, fell by more than four per cent on Monday to €73 − its lowest level since the war started.

The new COVID outbreak in China − where authorities loosened restrictions after a wave of protests − poses fresh challenges for the world economy.

The head of the International Monetary Fund, Kristalina Georgieva, said in a US television interview aired on Sunday that 2023 will be "tougher than the year we leave behind" for the world economy.

"Why? Because the three big economies, US, EU, China, are all slowing down simultaneously," she told CBS's Face the Nation programme.

"We expect one-third of the world economy to be in recession," Georgieva said.

Although the US may avoid it, she said half of the 27-nation EU will be in recession in 2023 as the bloc is "very severely hit" by the Ukraine conflict.

China's economy, which slowed "dramatically" due to its zero-COVID policy in 2022, will likely be at or below global growth for the first time in 40 years.