SOUTHAMPTON, Bermuda (Reuters) - Financial markets have likely lost their appetite for securitized assets backed by subprime loans due to the persistent credit crisis, former Federal Reserve chairman Alan Greenspan said.

"Markets have made a decision that subprime securitisation is much too risky," Greenspan told hedge fund managers and investors at an industry conference, adding that even though these instruments had been hugely popular they were unlikely to make a comeback any time soon.

Problems in the market for risky subprime mortgages sparked a broad market decline and tightening of credit globally in July and August as soaring foreclosure rates on loans made to borrowers with poor credit crimped the US housing market.

Since then many large investment banks have taken billions of dollars in write-downs related to mortgage securities.

While stock prices have recovered in recent weeks and the housing market appears to be holding up, Greenspan worried that global markets were still smarting from the blow, as shown by wider than normal bid-offer spreads.

"This thing is not collapsing back to normal as quickly as I'd like," Greenspan said.

Speaking about the housing market, Greenspan said prices for unsold homes will continue to be under pressure until the inventory starts to shrink. Homebuilders are continuing to offer perks to sell some of the empty houses, he said.

"We are reducing inventory but at a very slow pace," Greenspan said. "We've got a ways to go and I'm not sure where that leaves us in six to nine months."

Steadily rising oil prices — with a barrel trading at over $93 on Monday — hurt growth, but the 81-year-old former central banker also said he would have "mixed feelings" if the price spiked to $100 a barrel.

"This might not be all bad," he said, adding that the high price might force Americans to "break our addiction to oil" as it becomes more difficult to find new sources of it. While demand is often not flexible in the short term, in the long term Americans might eventually curb their appetite for huge cars and other things, he said.

The dollar, which has fallen against most other currencies, would likely slip further, Greenspan said. The Fed's trade-weighted broad dollar index recently hit its lowest since 1997.

"The real exchange rate of the dollar will weaken," especially against China's yuan, Greenspan said, adding that disparate yield expectations are pressuring the currency more.

Prices of goods imported from China, which had been falling for years, had begun to climb since the spring, he said, but he repeated what he has been saying for weeks: "I still think the chances for a US recession are less than 50-50."