NEW YORK (Reuters) - After years of meteoric rises, the global financial crisis is dampening the market for fine art and experts are hoping that's all it does during two weeks of major auctions in New York starting on Monday.
After London sales failed to live up to expectations earlier this month, experts are eyeing New York impressionist, modern and contemporary art sales at Sotheby's and Christie's auction houses to see how far the art market might follow the downward path of stocks, oil and property values.
And while auctioneers say they are cautiously optimistic, sellers in New York are being urged to rein in reserve prices, Sotheby's is cutting price guarantees and a major Picasso painting was withdrawn from sale at the last minute.
"There's no question there's a fair amount of uncertainty and fear worldwide, which makes a significant number of people cautious about using money for art," said Sotheby's Chief Executive Bill Ruprecht. "But hard assets such as art have a long history of holding their value."
More than $1 billion worth of fine art is set to go under the hammer in New York, including Francis Bacon's "Study for Self-Portrait" that Christie's expects to sell for some $40 million and Kazimir Malevich's "Suprematist Composition" that Sotheby's says could fetch up to $60 million.
"Frankly, I don't think there's going to be a collapse," said Baird Ryan, managing director of Art Capital Group, an art-related financial services firm.
But he expected "repricing in the fine art market, as there has been in every other one," adding that "everything's seen radical price dislocations in recent weeks."
"The auction houses have broadened the market, pulling in buyers from around the world and expanding interest in existing markets better than they ever have. But their massive overhead and infrastructure is leaving them vulnerable. It's a tricky balance," Ryan said.
Pre-sale estimates were largely established before the financial crisis exploded in September, and the auction houses are now dampening sellers' expectations, especially after the London sales missed minimum forecasts by up to $40 million.
"London was a good lesson for sellers to see there's a new reality, and we have to work with that," said Laura Paulson, Christie's deputy chairwoman and senior international director for post-war and contemporary art.
She has encouraged sellers to adjust their expectations, with mixed results. Those who were set on selling at the peak will prefer to hold onto their works, but others who have come to terms with selling have signed off on lower reserves.
"We're not naive to the fact that there's a lot to be contended with in terms of global financial markets ... There are challenges, but at the same time there are opportunities," Paulson added.
Clouding the forecast is the intangible, emotional, personal and aesthetic nature of art itself, which sets it apart from virtually every other commodity that attracts the wealthy, even real estate with which it is often compared.
"This world is so different from the reality of trading financial instruments," Sotheby's Ruprecht said.
"These are unique objects that happen to get collapsed into the art market. What characterizes our business is passionate people doing passionate things. Indifference is not what we've experienced," he said.
Some point to the stunning success of British star Damien Hirst's $200 million sale in September -- as the financial crisis was beginning to grow -- that blew away expectations.
Ryan, tellingly, referred to it as "the finale."
He said there are two schools of thought in the art world -- that "there is still great wealth out there and it will find its way to art, which is truly precious" or that the market's growth "stems from these excesses in the financial system."
As a result experts are wary to predict what might happen during the upcoming sales. "What's going to happen I can't tell you," said Ruprecht. "I'm not that rash."
Editing by Michelle Nichols and Alan Elsner