updated 12/8/2006 11:04:13 AM ET 2006-12-08T16:04:13

NEW YORK (Reuters) - U.S. consumer sentiment fell in December, a prelimiary report showed on Friday, as consumers pared back their views of future financial conditions.

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The University of Michigan said its preliminary reading on consumer sentiment in December was 90.2, down from November's reading of 92.1.

The index had been expected to dip slightly to 92.0, according to a median forecast of Wall Street economists polled by Reuters.

The survey's index of current conditions rose to 108.2 in December from 106.0 in November, while consumer expectations dipped to 78.6 from 83.2 in November.

Consumer spending accounts for about two-thirds of U.S. economic activity, but in recent years confidence measures have been a weak guide to actual spending.

Consumers' expectations for increased inflation was little changed in December, the report said.

The University of Michigan's preliminary December reading on one-year U.S. inflation expectations was 3.0 percent, unchanged from 3.0 percent in November.

Median expectations for inflation over a five-year horizon nudged higher to 3.1 percent from 3.0 percent in November.

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