In a historic decision, the Constitutional Court levied a relatively minor penalty against the ruling Justice and Development Party, or AKP, cutting in half the funding it receives from the state. The party had been charged with introducing Islam into Turkey's stern secular laws by, for instance, attempting to lift a ban on headscarves on university campuses. A conviction could have led to the banning of the party.

Investors cheered the ruling. After the verdict, the local currency climbed to a four-month high, and some bank shares enjoyed a double-digit lift. The decision "has avoided a calamity," said Chris Scicluna, an economist at Daiwa in London.

The court in Ankara said six of its 11 judges favored banning the AKP, one vote short of the seven required. While a victory for the AKP, the close vote suggests the struggle between the party and Turkey's secular establishment hasn't yet run its course.

The court's chairman, Hasim Kilic, said Wednesday that he hoped the narrow call and the financial penalty would serve as a wake-up call for Prime Minister Recep Tayyip Erdogan's party and that "this outcome will be assessed and that the necessary measures will be taken."

Still, the verdict -- which arrived on the third day of court deliberations -- considerably de-escalates months of political tensions. The court case against the government called for a ban of the party and 71 of its members, including its top leaders, the prime minister and president.

While the politicians could have regrouped under a different banner, a ban would have forced early elections. Heightening tensions, a double bombing Sunday night -- on the eve of the first day of the court's deliberations -- killed 17 and injured more than 100 people in Istanbul. No one has claimed responsibility for the blasts.

"We are certainly very much relieved that a sense of reality and wisdom has returned," said AKP Parliament member Suat Kiniklioglu, reached by phone in Ankara. "We are obviously not happy that half of our state funding will be cut off, but it's a penalty we can live with and absorb." The party will lose about $15 million this year, the Associated Press reported.

"The great uncertainty that was blocking Turkey's path has been lifted with this decision," Mr. Erdogan said after the verdict, the AP reported. "Our party, which was never the focal point of antisecular activity, will continue from now on to defend the republic's basic values."

Turkey's economy has grown at an average of 6.5% a year since the party first came to power in 2001. Foreign investment has skyrocketed. Turkey, an important ally of the U.S. and the West and a member of the North Atlantic Treaty Organization, has also increasingly played an important role as a regional power broker.

In the past month, Turkey has been mediating a peace deal between Israel and Syria and pushing to bring Iran on board with international demands over its nuclear-energy program.