NEW YORK (CNN/Money) - Investor optimism plunged to an all-time low in February amid fears about a possible war with Iraq and the tenuous U.S. economic recovery, according to a survey released Monday.

The Index of Investor Optimism, a joint poll conducted by UBS and the Gallup Organization, dropped 29 points to stand at 9 in February, its lowest level since the survey began in October, 1996 at 124.

In February, 35 percent of those polled said they are optimistic about the prospects of economic growth over the next 12 months, a record low and down from 42 percent in January.

A possible war with Iraq ranked as investors' top threat to the economic climate, with 37 percent saying it poses a major concern. A major terrorist attack and a prolonged economic downturn tied for second with 22 percent. Deprecation of the dollar and a conflict in North Korea rounded out investors' concerns.

Only 30 percent of investors are optimistic about the performance of the financial markets in the short term, while 51 percent say they are pessimistic and only 42 percent say it's now a good time to invest.

Expectations for short-term returns during the next 12 months held at 6.7 percent in February, although younger investors under 40 anticipate a higher rate of return of 9.1 percent, compared with 6.1 percent for those over 40, according to the survey.

Despite the dire outlook, 60 percent of investors say they are more optimistic about the U.S. markets than other regional financial markets, with European markets coming in at a distant 12 percent, the poll found.

The poll was conducted from Feb. 1 to Feb. 16 and included 1,000 investors randomly selected across the country. The sampling error is plus or minus three percentage points.