PARIS (Reuters) - French consumer confidence rose in December to its highest level in two and a half years, underscoring slightly improving prospects for Europe's second-biggest economy as a lower oil prices bolstered purchasing power.
The official INSEE statistics agency said the confidence index rose to 90 in December, up two points from the previous month to its highest level since June 2012, and closer to its long-term average of 100. November's reading was revised upward by 1 point to 88.
INSEE said that consumers were more upbeat about their personal finances as the outlook for prices sank, with inflation expectations falling across the euro zone.
The brightening came after President Francois Hollande said he would take "any risk" to lift growth above an official forecast for a 1 percent expansion in 2015, as a weak euro and low gas prices helped exporters and bolstered consumers' purchasing power.
"Altogether, we are getting more confident the French economy should recover in 2015 after a long stagnation," BNP Paribas economist Dominique Barbet said in a research note.
The data coincided with a marginal expansion in the French service sector in December to 49.7 from 47.9 the previous month, data compiler Markit said in a survey. The service sector rose reading above a 50-point threshold dividing an expansion in activity from a contraction for the first time since August.
However the outlook for the labour market, dogged by chronic high unemployment, remained gloomy. INSEE's monthly reading of consumers' expectations for unemployment rose by three points to 68 in December, showing the French expect joblessness currently above 10 percent to keep rising.
(Reporting By Nicholas Vinocur; Editing by Andrew Callus)