CBOE Volatility Index has biggest one-day drop since Aug 2011

Mon Dec 31, 2012 4:25pm EST

Dec 31 (Reuters) - The CBOE Volatility Index, or the VIX, Wall Street's favored measure of anxiety, posted its biggest one-day decline since August 2011, as lawmakers closed in on a deal to avert the "fiscal cliff."

The VIX ended down 20.7 percent to 18.02, as the equity market rallied sharply on the last trading day of the year.

Volatility had been on the rise in recent days, as it appeared Washington would not be able to agree to a deal that would head off a series of $600 billion in automatic spending cuts and tax increases that would be expected to hurt the U.S. economy.

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