U.S. consumer confidence unexpectedly rose in October in the first report on sentiment to fully reflect the impact of the Sept. 11 attacks.

The University of Michigan's preliminary October consumer sentiment index rose to 83.4 in October from 81.8 in September, market sources said Friday. Most economists had forecast a drop to 76.

Economists closely watch consumer confidence because they fear a sharp drop could lead to weaker consumer spending. Earlier, the government reported retail sales plunged 2.4 percent in September, and economists are looking to see if those declines continue. Consumer spending drives about two-thirds of U.S. economic activity.

The expectations index, which tracks consumers' attitudes about the coming year, rose to 77.9 in October from 73.5 in September. The current conditions index, a gauge of Americans' views of their present financial situation, fell to 92.1 from 94.6 in September.

The University of Michigan preliminary survey is based on 250 telephone interviews with Americans across the country and is updated later in the month.

Reuters contributed to this report.