U.S. industrial production rose in line with expectations in December as electric and gas utilities stepped up output in an unusually cold month, a Federal Reserve report showed on Friday.

The 0.6 percent increase matched the consensus forecast from economists polled by Reuters. It was also the same as November's increase, which was initially reported as a 0.8 percent advance.

For the fourth quarter as a whole, industrial production increased at an annual rate of 7 percent. That will likely reinforce economists' expectations that the economy expanded at a rapid clip in the final three months of 2009.

Capacity utilization, a measure of slack in the economy and one of the factors the Fed is watching to decide when to raise its benchmark interest rate, rose to 72.0 percent in December from 71.5 percent in the previous month.

Although capacity utilization has been rising for several months as the economy pulls out of a deep recession, December's reading was still 8.9 percentage points below its average for the period from 1972 to 2008.

Manufacturing output declined 0.1 percent, after a gain of 0.9 percent in November. Utilities rose 5.9 percent, which the Fed attributed to unseasonably cold weather.

(Reporting by Emily Kaiser; Editing by Theodore d'Afflisio)