A painting by Picasso of his first wife Olga Koklova was put up for auction by Christie's in New York last week. The classical portrait of the former Russian ballerina sitting sideways on a chair was expected to fetch $30 million (€34.2 million). But when auctioneer Christopher Burge put it under the hammer there was only one telephone bidder, and the work was withdrawn.

For those scrutinising the opening of the fine arts auction season in New York last week to see what the art market's response would be to the US economic slowdown, the message is clear.

Despite the record of the high-end art business defying market slumps, the big money is not out there this time. The mixed quality of the paintings also meant that collectors were not rushing to sell, experts said, because they feared the value of art works had been eroded.

The depressed market was a huge set-back for Phillips de Pury Luxembourg, the 205-yearold London-based auction house that has spurned its traditional middle-market clientele and is trying to hustle its way to the uppermost strata of an art market long-dominated by Christie's and Sotheby's.

Phillips opened the season last Monday with a sale at its almost-completed new auction house, a sandstone building with Art Deco-style architectural detail on New York's West 57th Street. It was promoted as one of the best art sales in recent years, and connoisseurs were welcomed by white-gloved attendants to the swanky new auction room with central revolving display area.

The timing of the gamble by Phillips to loosen the grip of the old duopoly on the $5-billion-ayear (€6.27 billion) international art market should have been propitious. Christie's and Sotheby's are under a cloud due to a price-fixing scandal which resulted in their former chairmen being indicted in a New York court the week before last. Last year, they jointly paid $512 million to settle a class-action lawsuit brought by clients. Sotheby's, which pleaded guilty and paid an additional $45 million fine, last year dropped 14 per cent in sales. Christie's avoided a similar penalty by providing evidence against its rival and its sales increased 3 per cent.

Phillips, owned by the French luxury group LVMH run by Bernard Arnault, had assembled many fine works, including five by Cezanne and two by van Gough from the collection of German dealer Heinz Berggruen. It bought up the collection itself, in the process changing the model of the auction world where art houses always acted as intermediary for buyers and sellers.

Two of the Cezannes and one van Gough did not reach the reserve and a third of the pictures were left on the walls. The sale took in about $124 million, helped by the purchase of a Cezanne portrait of a child for $16.5 million, rather than the expected $171-$236 million.

The second big event of the season, Christie's sale of impressionist and modern art in New York on Wednesday, also fell short of expectations. The failure of the Picasso portrait to find a buyer contributed to a disappointing sale total of only $83.3 million, well behind the estimate of $116 million to $150 million. Another sign of the weakness in the US market was that, unusually, a minority of bidders were Americans. Most were Europeans.