Investor confidence at record low: State Street

LONDON (Reuters) - INVESTOR (INVEB.ES)confidence fell to its lowest level on record in October in a massive flight from risky assets, State Street said on Tuesday.

The U.S. financial services firm said its global State Street Investor Confidence Index fell to 58.2 in the month from an upwardly revised 75.7 in September, previously reported as 70.7.

It was the lowest level recorded in the more than 10 years for which State Street has compiled the index, falling below the previous trough of 65.9 set in December 2007.

The index is extrapolated from movements in more than $15 trillion of assets State Street holds as custodian for institutional investors.

"The combination of financial crisis along with truly global macroeconomic risk of deep recession has been causing a complete re-evaluation of risk across a wide investment community centered on U.S. institutional investors," said Harvard University Professor Ken Froot, a co-developer of the index.

Froot noted that even the strongest, broad-based selling of risk seen in State Street data during the 1996 Asian crisis and the Russian crisis of 1998 "appears small compared with the current outflows."

The latest reading was measured using data from September 17 to October 15, a period in which the MSCI all-country world stock index fell more than 22 percent. It has since recovered slightly.

It was also a period in which governments and central banks were forced to take extraordinary measures to inject liquidity into the battered world financial system.

The report was the second in as many days to show record levels of risk retrenchment among investors.

Swiss bank UBS said on Monday that risk appetite among equity investors hit the lowest level at least 18 years last week. Its weekly equity risk indicator, on which anything below zero means low risk appetite, fell to minus 5.53. This was the lowest in the UBS index's history, which goes back to 1992.

State Street said North American investor confidence was the worst hit during the month. Confidence among North American investors fell to 50.8, from a downwardly revised level of 75.1, previously 76.1.

Elsewhere, the declines were less dramatic, with European confidence falling to 79.6 from a revised 81.1 and Asian confidence declining to 86.5 from an upwardly revised 87.1.