WASHINGTON (Reuters) - Public confidence in U.S. economic policy dipped this month as unstable markets and shaky financial institutions left Americans uneasy about the future, according to a Reuters/Zogby poll released on Wednesday.

A worker manoeuvres a lift as financial headlines play across a ticker in Times Square, New York, January 22, 2008. REUTERS/Jeff Zelevansky

The Reuters/Zogby Index, which measures the mood of the country, dropped to 88.7 from 90.4 in June as five of the 10 measures of public opinion used in the index fell at least slightly and three remained steady.

The index fell to near its record low of 87.7, recorded in March, as optimism about personal finances waned and approval ratings for the Bush administration’s economic and foreign policies dropped.

The rating for economic policy suffered the sharpest fall, earning positive marks from just 10 percent of Americans -- down 4 percentage points from June.

The drop came amid a continuing housing crisis, pledges of government help for the top two mortgage finance agencies and the collapse last week of IndyMac Bancorp -- the third-largest bank failure in U.S. history.

“Public confidence took a dip all around as Americans have settled into a recession mentality here,” said pollster John Zogby. “That only serves to make the real recession fester -- people are much less likely to buy anything or do anything.”

President George W. Bush’s approval rating was 25 percent, up one percentage point from June, and the number of Americans who believe the country is on the right track nudged up to 18 percent from last month’s all-time low in a Zogby poll of 16 percent.

The approval rating for Congress remained mired at its all-time low of 11 percent.

Most of the changes were statistically insignificant in a poll with a margin of error of 3.1 percentage points.

Americans’ confidence in their children’s futures dipped two percentage points to 59 percent, and the number of Americans who feel safe from foreign threats and approve of U.S. foreign policy fell by one percentage point each.

Zogby said there was room for public confidence to fall more this summer amid the continued flood of bad economic news and gasoline prices that continue to rise.

“We’ve got further to go here. There is the potential that this goes further down,” he said.

The index combines responses to 10 questions on Americans’ views about their leaders, the direction of the country and their future. Index polling began in July 2007 and that month’s results provide the benchmark score of 100.

A score above 100 indicates the public mood has improved since July 2007. A score below 100, like the one this month, shows the mood has soured.

The RZI is released on the third Wednesday of each month.

The telephone poll of 1,039 likely voters was taken Wednesday through Sunday.

(Editing by Patricia Zengerle)