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War fears depress economic index

NEW YORK — A yardstick of future U.S. economic activity declined in February, reversing a four-month trend of gains, the Conference Board reported Thursday.

The New York-based group said its Index of Leading Economic Indicators fell 0.4 percent in February to 111.1 as Americans' fears about war and terrorism signaled an impending slowdown in consumer spending.

The index measures where the overall U.S. economy is headed in the next three to six months. It stood at 100 in 1996, its base year.

February's drop was in line with analysts' expectations and, with war already under way, the report received less scrutiny than usual, economists said.

"It tells us how the economy was faring heading into the conflict and how things might look whenever it ends," said Douglas Porter, senior economist at Nesbitt Burns Securities of Chicago. "However, whatever transpires in Iraq in the next days or weeks will have greater impact than what the leading indicators tell us now."

Consumers have been the strongest positive force for the nation's struggling economy, economists said, but their desire to spend appeared to taper off in February and could be weaker still in March.

Six of the 10 indicators that make up the leading index fell in February. Among the negatives were stock prices, consumer expectations and manufacturers' new orders for consumer goods and materials.

The Conference Board's coincident index, which measures current economic activity, remained flat in February at 115.5.

The leading indicator report came on the heels of a Labor Department report that initial applications for unemployment insurance dipped by a seasonally adjusted 4,000 to 421,000 for the work week ending March 15.

The string of disappointing economic reports was an additional drag on stock markets, which declined Thursday as the start of the war with Iraq heightened investors' worries about the length of the conflict and its impact on the economy.

In morning trading, the Dow Jones industrial average was down 95.86 at 8,169.59, having gained 741 points in the previous six sessions.

The broader market also fell. The Nasdaq composite index dropped 16.75 to 1,380.32 and the Standard & Poor's 500 index fell 11.18 to 862.84.