Sharp drop in US consumer morale

The fall in confidence has increased fears of a recession

Confidence among US consumers fell to a five-year low in February, a closely watched survey has indicated, underlining recession fears.

The Conference Board said its index, which measures how consumers feel about the economy, fell to 75.0 in February from 87.3 in January.

It was the biggest monthly drop in the index since the aftermath of Hurricane Katrina in September 2005.

It was also the lowest reading since just before the US went to war in Iraq.

"The levels we are at now are suggestive of a recession," said Chris Rupkey, senior financial economist at the Bank of Tokyo-Mitsubishi UFJ in New York.

"It's just not the levels, it's the precipitous drop from January that's most worrying."

The US Federal Reserve cut interest rates twice in January in an attempt to boost both consumer sentiment and the wider economy.

The US economy is reeling from a collapse in the housing market and related turmoil in financial markets.