U.S. recession fears hit high on prediction market

WASHINGTON (Reuters) - Expectations the United States will be hit by a recession this year reached an all-time high on the Intrade predictions market on Tuesday, with some traders putting the chances as high as 77.5 percent.

The new high was the second in as many days. Intrade chief executive John Delaney said the company's contract on the chances of a U.S. recession in 2008 had hit an all-time high of 76.8 on Monday.

The Dublin-based exchange has been selling contracts on the likelihood of a U.S. recession in 2008 since August, when the price was $3, suggesting a 30 percent chance of two consecutive quarters of contracting real gross domestic product.

Contracts are structured so that the price reflects a percentage likelihood of an event occurring.

Traders' estimates of the chances of a U.S. recession in 2008 hovered between 40 percent and 50 percent for most of the autumn but began rising after the first of the year.

Expectations of a recession rose as high as 77.5 percent on Tuesday before easing back to 68 percent, according to trading data on Intrade.com.

(Reporting by David Alexander; Editing by John O'Callaghan)