LONDON (REUTERS).- The Frieze Art Fair is feeling the chill of recession this year, with market turmoil still fresh in the minds of ultra-wealthy collectors and investors who descend on London each year for the contemporary art showcase.

The fair, held in a giant marquee in Regent's Park, has quickly become a magnet for the art world's most important players, lured also by a series of spin-off events, glamorous parties, exhibitions and high-profile auctions.

Tens of millions of pounds' worth of art change hands, although 2009 looks like suffering a similar fate to 2008 -- sales volumes down sharply on earlier editions, reflecting a cautious approach to the once booming contemporary art sector.

"Compared to a year ago we are in a totally different world," said Anders Petterson, founder of ArtTactic, which analyses art market confidence. "If you look at some of the sales, they are down 70, 80 percent in terms of overall value.

"But the art world is far from dead. A lot of people are interested and there is just not the craziness we have seen in the past. Everything has reverted to more of a sane level."

Frieze, on from Thursday to Sunday, features 165 galleries, although 28 of last year's exhibitors withdrew.

Directors Amanda Sharp and Matthew Slotover are expecting around 60,000 visitors to the event, which started in 2003 to highlight cutting edge art and quickly became an unmissable date on the art market calendar.

Coinciding with the main event is the Zoo Art Fair, which has moved from upmarket central London to the less grand East End. Some other satellite events have closed.

For people with limited budgets, there is the Free Art Fair, which gives away works for free and is billed as "a chance to remember that art is about more than just money," and the Affordable Art Fair which runs from October 22-25.

SHRUNKEN SALES

Christie's and Sotheby's, the world's leading auction houses, hold a series of contemporary and post-war art sales in London which underline the extent to which the market has contracted in recent months.

Christie's expects its sales to fetch 16.2-23 million pounds ($26-37 million), including an auction of Italian art, versus comparable figures last year of 81.9-109.3 million.

Sotheby's estimates its sales to make 15.6-21.7 million pounds versus estimates of 52.7-73.7 million in 2008.

The auctioneers say the extent of the decline reflects how sellers are reluctant to offer their best works during uncertain economic times more than the erosion in values for art.

Experts also argue that auctions tell only part of the story as an increasing number of transactions are taking place privately, away from the public gaze where a failed sale can send negative signals about an artist's work.

British artist Damien Hirst, who has profited perhaps more than anyone from sky-high prices, holds an exhibition of new paintings at the Wallace Collection opening on Wednesday.

"No Love Lost" is a series of 25 paintings, many featuring the image of a skull against dark blue-black backgrounds in works reminiscent of Gerhard Richter or Francis Bacon.

Despite his reputation as the master of marketing, the 44-year-old said there was a difference between good art and expensive art.

"Good art is good art whether it's selling or not," he said. "I've got things on my wall that I bought that are probably worth 10 percent of what I paid for them.

"In a dark moment you might ... worry about it, but if you walk past it in a room and you look at it you just go 'that's great'. My business manager said to me the only time you have to worry about what something costs is when you want to sell it."

(Editing by Steve Addison)