Investor optimism across Europe fell dramatically in September as investors expressed deep concern over the threat of a war against Iraq and continued economic uncertainty, according to the Index of Investor Optimism® - EU 5, a joint effort of UBS and the Gallup Organization.

The overall Index fell by 23 points to a level of -24 points in September, down from -1 in August, the Index's highest month-on-month loss to date (Table 1). The negative Index value, the lowest measured since the Index - EU 5 baseline survey was conducted in October 2001, reveals for the second month in a row that the number of pessimistic responses exceeded the number of optimistic responses.

Increased concern by investors over economic growth in the next twelve months contributed the most to the decline in the overall Index (Table 2). Nearly half of investors, 47 percent, were pessimistic about economic prospects, up from 39 percent in August. However, despite increased uncertainty, a majority of individual investors (60 percent) still believe a moderate recovery is the most likely scenario for the European economy compared with 29% who expect continued economic weakness, and 5% who anticipate a worsened economic situation (Table 3).

London, 23 September 2002
UBS AG