UPDATE: Italy Sep Consumer Confidence Highest Since Dec 2006

ROME -- Italian consumer confidence rose unexpectedly in September to its highest level in nearly three years due to renewed optimism about the economy and personal finances among households, data showed Monday.

State-funded research center ISAE said its seasonally adjusted consumer confidence index for Europe's fourth-largest economy jumped to 113.6 in September from 111.8 in August.

The 113.6 reading was well above the 111.4 forecast by eight economists polled. Consumer confidence has been rising since March, when the index hit a low of 99.8.

The European Commission this month predicted that the recession in Italy will be worse than expected this year, with output set to contract by 5%. But the commission also predicted that a gradual recovery in the second half of the year should lead to renewed economic growth in 2010.

The recession eased in the second quarter, with gross domestic product contracting by a smaller-than-expected 0.5% compared with the previous quarter.

ISAE said consumers' views on the overall economy in September rose for the first time since March 2002, to 89.6 from 87.1 in August.

Consumers' expectations with regard to their personal situation rose to 125.9 in September from 125 in August.

ISAE conducted the poll Sept. 1-16.