Turkey's highest judicial body today ruled against closing the governing AK Party for Islamist activities.
However, partial financial penalties have been imposed on the party, chief judge Hasim Kilic said.
The verdict is set to ease months of political uncertainty, which has battered Turkey's financial markets on fears that the democratically elected party would be closed down
The court case was linked to a long-running power struggle between Turkey's secularist establishment and the Islamist-based AK Party, which are at odds over the direction of the officially secular but predominantly Muslim country.
The European Union welcomed the decision this afternoon, saying the ruling should help political stability in the EU's biggest candidate country.
"Of course we have to read it now in more detail, but it is positive. Turkey is living a tense situation and we very much hope that the decision by the court will contribute to restore political stability," said Cristina Gallach, spokeswoman for EU foreign policy chief Javier Solana.
The AKP won a sweeping re-election with 47 per cent of the vote last year and denied charges of violating the secular constitution by supporting Islamist activities.
Reuters