Investor confidence sank to its second lowest level in at least nine years in November as fears about the credit crisis combined with worries over a deteriorating world economy, State Street said on Tuesday.

It said the fall mainly reflected U.S. investors shedding their exposure to stocks, particularly in emerging markets.

The U.S. financial services firm said its global State Street Investor Confidence index sank to 74.3 from a downwardly revised 82.0, previously 82.6.

It was the second lowest reading for the index since it was first compiled in September 1998. The lowest was a brief dip to 72.1 in February 2006.

This month's decline in investor confidence takes place against a backdrop of deteriorating fundamentals, including a diminished outlook for consumer spending and global growth, and some acute credit pressures on the financial sector, said Harvard Professor Ken Froot, a co-developer of the index.

While institutional investors were happy to provide liquidity to other market participants during the market turmoil of August, they have now decided that the risks to the underlying economy are much greater than before, and have reduced their allocations to risky assets with purpose.

State Street compiles its index based on asset movements among its insitutional investor clients whose $15.1 trillion it keeps as custodian.

It said North American investors were the key drivers behind November's decline with their regional confidence index falling to 78.9 from an upwardly revised 90.4, previously 89.2, in October.

The underlying data ... shows that U.S. investors have reduced their allocation to equities, particularly in the emerging markets, but also in the U.S., said State Street's Paul O'Connell, also a co-developer.

The European index fell to 84.0 from 84.9, previously 83.6. Asian investor confidence rose to 86.9 from 86.1,

previously 85.7.

Global investors have been jolted since summer first by fears over the financial sector's exposure to risky loans and then by signs of an economic slowdown in the United States, Europe and Japan.

World stocks have staged their sharpest fall so far in November since September 2002.

Emerging markets have seen their biggest fall since May 2006 so far this month.