Small step towards confidence recovery

The data came after the Central Bank cut rates to a historic low late on Thursday to shore up an economy that saw its slowest pace of growth in six years in the third quarter. Easing inflation enabled the Central Bank to make the 200 basis-point reduction.

"The rate cut, which is front-loaded, will have a big impact on consumer demand and help GDP to return to serious growth in the third and fourth quarters of 2009," said Nurhan Toğuç, economist at Ata Invest.

"Lower rates and disinflation are making everything more affordable, so it's natural for confidence to rise," she said. The consumer confidence index rose 1.48 percent last month to 69.9 points, the Turkish Statistical Institute, or TÜİK, said. The index fell 7.22 percent to a record low of 68.88 points in November.

"The increase in the confidence index is due to the improvement in consumers' assessment that the period was a good time to buy durable goods," the institute said on its Web site.

Sentiment in financial markets has also improved on hopes that Turkey will soon agree a loan deal with the International Monetary Fund to help the emerging market weather a worldwide economic slump that has dried up liquidity and slowed demand.