Consumer morale drops further in July

A shopper passes an advertisement on a shop in Oxford Street in London September 30, 2010.

LONDON (Reuters) - Consumer confidence edged down further in July, a survey showed on Thursday, in another sign that subdued consumption will remain a major drag on the fragile economic recovery.

Building society Nationwide's consumer confidence index fell by two points to 49, well below its long-run average of 79 and not far above February's all-time low of 41 points.

Consumers' assessment of their present situation was unchanged from June, but they took a gloomier view of the future.

"It is unlikely that we will see any considerable improvement in confidence in the remainder of 2011," Robert Gardner, Nationwide's chief economist, said in a statement.

"Indeed, it may be that we see a further deterioration in August, following riots in a number of UK cities and sharp declines seen in stock markets around the world," he added.

Consumers expect the value of their homes to fall by 0.4 percent over the next six months, Nationwide said, adding that this partly explained their reluctance to buy big-ticket items.

Britons have cut back on spending as climbing prices, higher taxes and slow wage increases eat into their budgets while uncertainty about job security weighs on sentiment.

(Reporting by Olesya Dmitracova)