By Mike Collett-White
LONDON, Feb 2 (Reuters) - Big art sales in Europe this month are a step into the unknown for auction houses, as they seek to gauge how the economic turmoil is affecting wealthy clients' appetite for multi-million dollar works of art.
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The booming market for top-quality works turned sharply lower in late 2008, particularly for contemporary art which had enjoyed a long run of spectacular gains.
But the fallout from the banking crisis and tumbling values of oil, stocks and property has not yet been as bad as some experts predicted.
Auctions at Christie's and Sotheby's (nyse: BID - news - people ) this week and next in London, and at the end of February in Paris, will tell more about whether the worsening financial climate is to be fully reflected in prices as the hammers go down.
'It is a question of whether one feels that the market reflects the general economy and to what extent the banking crisis influences values of works of art which collectors have only one opportunity in a lifetime to buy,' said Jussi Pylkkanen, president of Christie's Europe.
'After the sales in London and Paris the market will have a clearer idea,' he told Reuters at the auctioneer's London showroom surrounded by works by Monet, Modigliani, and Toulouse-Lautrec.
Sotheby's and Christie's have tried to focus on fewer works of high quality that have rarely, if ever, come to market, in order to lure big spenders during difficult economic times.
They face a tough task, as confidence plummets.
ArtTactic, which measures the mood of the art market, said in a recent report that its U.S. and European Contemporary Art Market Confidence Indicator fell 81 percent between May and December last year to its lowest on record.
'The current reading implies that pessimists outweigh optimists in the Western contemporary art market by a ratio of 10:1,' it said.
Although works by old masters and impressionist painters have held up better, auction houses are feeling the pinch.
The practice of guaranteeing sellers a minimum price to secure a work for auction has become a rarity, and Christie's said last month its was considering a number of cost-cutting measures including job cuts.
Sotheby's kicks off the European sales with an impressionist and modern art auction on Tuesday, when it hopes a sculpture of a young ballet dancer by Degas will fetch up to $17.5 million.
Christie's holds its equivalent sale the following night, and among the highlights is Monet's 'Dans la Prairie', which is expected to sell for around $21 million.
Sotheby's holds its contemprary art sales in London later this week, while Christie's goes a week later.
In Paris from Feb. 23-35, the collection of fashion designer Yves Saint Laurent goes under the hammer at Christie's and is estimated to fetch $255-383 million.
Pre-sale estimates for Sotheby's London day and evening sales of impressionist and modern art plus the equivalent auctions for contemporary works range from 70-97 million pounds, sharply down on the 196-275 million at the same time last year.
At Christie's the decline in overall estimates is also marked, falling to 91-131 million pounds from 197-278 million.
(Editing by Paul Casciato)
(To read more about our entertainment news, visit our blog 'Fan Fare' online at http://blogs.reuters.com/fanfare) Keywords: ARTS AUCTIONS/
(London newsroom: tel +44 20 7542 4015; mike.collett-white@reuters.com)
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