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Last Updated:  Tuesday, 25 February, 2003, 17:21 GMT
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US consumer confidence has dropped to its lowest level since October 1993, prompting fears about the prospects for economic recovery.

Confidence fell by an unexpectedly-steep 15 points in February, figures from private business group the Conference Board showed.

Rising oil prices and the threat of a war with Iraq have been blamed for the gloomy mood.

The monthly survey is seen as a barometer of future consumer spending, which makes up about two thirds of the US economy.

Stock falls

The markets reacted badly to Tuesday's figures, with the Dow Jones Industrial Average shedding more than 100 points, before recovering slightly to stand 1.1% lower in mid-morning trade.

Brian Pears, head of equity trading at Victory Capital Management, said: "In the last few weeks it's been the geopolitical tensions that have sent us tumbling down, and I think that's the focus today (Tuesday).

"Anything that adds to the feeling of uncertainty is throwing us."

The consumer confidence index fell to 64.0 in February, from a downwardly revised 78.8 in January.

It was the third consecutive monthly decline.

Economists on average had expected the index to fall to 76.8.

'No rebound'

Lynn Franco, director of the Conference Board's Consumer Research Centre, said: "Lacklustre job and financial markets, rising fuel costs and the increasing threat of war and terrorism appear to have taken a toll on consumers.

"This month's confidence readings paint a gloomy picture of current economic conditions, with no apparent rebound on the short-term horizon."

The present situation index, a measure of consumers' current attitudes about the economy and their finances right now, dropped to 61.6 in February from 75.3 in January.

The expectations index, a gauge of consumers' six-month outlook, fell to 65.6 from a revised 81.1.

The BBC's Michelle Fleury
"If confidence drops too much, consumers may stop spending"

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