NEW YORK - SOTHEBY'S on Tuesday bowed to economic realities and slashed prices for much-hyped contemporary art works at an auction where almost a third of lots failed to sell.

The auction in New York of works by headline artists including Jeff Koons, Lucian Freud, Damien Hirst, and Andy Warhol, at times resembled a high-end fire sale.

Of 63 works on offer only 43 sold. Just a handful that did sell met their pre-auction estimates, as Sotheby's accepted greatly reduced prices, and even fewer went above target.

The dismal showing highlighted how the global financial crisis has knocked a hole in the recently booming luxury collector's market.

Similar performances were seen at Sotheby's and rival Christies last week in their New York auctions of impressionist and modern art.

Lead auctioneer Tobias Meyer put on a brave face, saying afterwards: 'We are very happy with what happened tonight'.

He said that the hugely reduced prices reflected demand from a 'seasoned, smart collecting community responding to great material'.

'When the price was right, the audience responded and bought it. When the estimate might seem excessive, clearly they didn't'.

The auction room in New York's ritzy Upper East Side was jammed for the sale, but the upscale customers, many in jewellery, furs, and other finery, were bargain hunting.

Sotheby's often bowed to the inevitable and agreed to sell for as little as half the pre-auction target. Twenty items, including paintings by Anish Kapoor, Roy Lichtenstein, Warhol, Freud and Jean-Michel Basquiat, stayed on the shelf.

A large painting named Archisponge by Yves Klein was the chief success, selling for over US$21 million (S$31.6 million).

However, this was still shy of the pre-auction target announced as 'in the region of 25 million US dollars'.

Beggar's Joys, a painting by Philip Guston, fetched 10.16 million US dollars - well under the target of 15 million US dollars.

Other bargains included Tom Wesslemann's Great American Nude at 4.14 million US dollars, where the target had been six to eight million US dollars.

Of course, the notion of a good deal in the exuberant world of contemporary art is relative.

Mirror Painting by Gerhard Richter, which consists of a large rectangle of glass covered in red pigment, may have fallen far short of its target, but still sold for more than a million dollars.

A green dollar sign on a red background by Warhol fetched almost two million dollars, and an unidentified collector was willing to part with about a million US dollars for Equivalent V - 120 ordinary bricks arranged in a rectangle.

However, four empty boxes by Warhol, estimated at 2.5 to 3.5 million US dollars, failed to sell. So did Roy Lichtenstein's Half Face with Collar, a comic-book style picture of a man's mouth and neck valued at 15 to 20 million US dollars.

Mr Meyer needed all his charm and guile on such a night.

Selling Jeff Koons' Cheeky, estimated at four to six million US dollars, Meyer softened up the crowd, quipping: 'Shall we be a little cheeky?' Laughter rippled through the room and immediately another bid came in.

'See, that was 100,000 US dollars more,' Mr Meyer said, adding: 'Still not cheeky enough.' -- AFP