UK sales were down 16%, according to the firm's latest quarterly figures.

And the company said it expects conditions to remain tough in the UK for the rest of the year.

Prudential announced its first dividend cut since 1914 in July, and upset investors by hinting more cuts may be in the pipeline.

'Difficult conditions'

Prudential shares were down 1.3% at 461.75 in early trade.

The firm said its worldwide sales using the industry's standard measure - regular premiums and one-tenth of single premiums - fell 10% in the first nine months of the year.

The figure in the UK was 16% lower as weak demand for with-profit bonds offset growth in corporate pensions and individual annuities.

Chief executive Jonathan Bloomer said: "The markets in which we operate have been difficult this year.

"In the UK, consumer confidence has not yet fully recovered."

Sars impact

However, Mr Bloomer said market conditions had shown signs of stabilising - and demand for UK corporate pensions was picking up.

The picture outside the UK was brighter, with Prudential Corporation Asia reporting a rise in sales of 17% despite the impact of the Sars virus earlier this year.

Jackson National Life's retail sales of �2.8bn were also 1% higher than the comparable period of 2002, with strong demand for variable annuities.

Half-year figures from the Pru in July showed a 27% drop in operating profits to �397m with total insurance and investment sales little changed at �15.52bn.

'Challenging conditions'

Putting investors on stand-by for a 40% full-year dividend cut, Mr Bloomer described the conditions in July as the "harshest for a long time".

Excluding with-profit bonds, Prudential said UK sales were 6% higher than 2002 because of the strength of corporate pensions and individual annuities.

"Prudential UK expects conditions in the final quarter to remain challenging, but believes its focus is appropriate.

"It is confident it is well positioned to take advantage of the recovery in the savings market," Mr Bloomer added.