Traders more skeptical of Obama-Clinton dream team

WASHINGTON (Reuters) - Chances of a Democratic "dream team" with U.S. presidential candidate Barack Obama picking former rival Hillary Clinton as his running mate are increasingly unlikely, traders on the prediction markets are betting.

Expectations that Clinton will become Obama's vice presidential running mate fell as low as 10 percent in trading on Dublin-based Intrade in June, down from more than 20 percent early in the month. Traders gave her a 14.5 percent chance on Tuesday after she campaigned with Obama last week.

Traders were betting Obama would defeat Republican presidential candidate John McCain in the November election, giving him a 65 percent chance versus nearly 31 percent for McCain. Those numbers were little changed from early June, when Obama was given a 61 percent chance of winning versus a 35 percent chance for McCain.

Traders on the Iowa Electronic Markets, run by business professors at the University of Iowa, made similar predictions, giving the Democratic candidate a 66 percent chance of victory versus 34 percent for the Republican.

Virginia Sen. Jim Webb was seen as Obama's most likely vice presidential pick, with Intrade traders giving him a 21 percent chance.

Retired Gen. Wesley Clark, who touched off a controversy with remarks about McCain over the weekend, was given a 10 percent chance of being Obama's vice presidential pick, Intrade trading showed.

Webb, Clinton and Clark were the strongest candidates in a field of some 40 possible vice presidential picks for the Democratic nominee.

Former Massachusetts Gov. Mitt Romney was viewed as McCain's likely running mate, with traders giving him an 18.5 percent chance.

They gave Minnesota Gov. Tim Pawlenty a 16 percent chance of being the Republican vice presidential candidate and South Dakota Sen. John Thune a 15 percent chance.

Several other candidates were given a 10 percent chance or better of being chosen by McCain, including former Arkansas Gov. Mike Huckabee, once a McCain rival for the Republican nomination, who was given a 13.4 percent chance of being McCain's running mate.

Contracts on the political prediction exchanges are structured so trading prices are expressed as a percent likelihood of an event occurring. Studies have shown that the predictive power of markets is comparable to that of opinion polls.

(Editing by David Wiessler)