A Francis Bacon self-portrait failed to sell at auction in New York last night, in a significant sign that the global financial tsunami is breaking over the international art market.

Bacon's 1964 "Study for Self Portrait" - billed as a highlight of Christie's contemporary art auction - was estimated to take in around $US40 million (£26.8 million). A Bacon triptych went under the hammer in New York last May for $86.2 million (£57.9 million), a record for the British painter and it was expected that the self portrait would fetch a similarly high price.

But when bidding reached $27.4 million (£18.13 million) the auction house dramatically halted the proceedings, to a chorus of gasps from a stunned audience.

Seventy-five contemporary works were on sale on Wednesday. Among the most important lots was a Jean-Michel Basquiat painter of a boxer, owned by Metallica co-founder and drummer Lars Ulrich, which fetched just over $13.5 million but short of the record $14.6 million for a Basquiat.

A chill had already entered the art market last month, when a rare portrait of Francis Bacon by Lucien Freud sold for £1.6 million less than expected, and the autumn season of art sales, which began on November 3, was being closely watched.

However in the fortnight since the autumn season began, there has been a big drop off of sales of impressionist, modern and contemporary works of art.

The number of unsold works has often exceeded 30 or 40 per cent of lots since November 3, and barring a few notable exceptions the sales prices are lower than the estimates for the majority of pieces.

Art sales were still high in the spring sale season earlier this year, with records set at Sotheby's and Christies' for works by Monet, whose 'Le Pont du chemin de fer a Argenteuil' went for a record $41.4 million (£27.8 million) and Munch, whose 'Girls on a Bridge' sold for $30.8 million (£20.68 million), a record for the artist.

The record sales were seen as a sign that the art market was protected from the deepening economic gloom.

At the time David Norman, chairman of Sotheby's impressionist and modern department, said the sales had displayed the "underpinnings of a really strong market that we believe is going to continue as long as we keep the estimates appealing to the consignors and choose the right property."

He added: "There is still so much liquidity and so many buyers from everywhere."

Such optimism has evaporated recently, and last night's sale will cast a further pall over the international market. Some experts say the fall in sales is due to the disappearance of hedge fund managers and Russian oligarchs from auction rooms.

But some of Francis Bacon's work still seem popular - at least within a certain market. His paintings of popes - of which there are just 40 in the world - are seeen as a trophy by some collectors, according to Sarah Thornton, the author of 'Seven Days in the Art World'.

"These paintings are of a very powerful man in purgatory, in like a free-fall into Hell," she told National Public Radio (NPR) in the US on Tuesday. "The popes look terrified. I think, oh my God, that must be what it's like to be a hedge fund manager right now."

Editor's choice

• The super cool Vampire Weekend
• Streep and Baldwin get complicated
• Guy Ritchie on Sherlock Holmes