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Uncut diamonds from southern Africa and Canada are seen through a jeweller's loupe at De Beers headquarters in London Jan. 17, 2011.

STEFAN WERMUTH

It's still a sluggish global recovery, but early signs indicate that consumers this holiday season are prepared to step up in surprisingly good numbers for that ultimate luxury purchase: diamonds.

Demand for diamond jewellery is expected to hold its own over the critical holiday sales period, although not at the same levels seen in the two previous years, say industry officials.

Euro zone debt worries, an uneven recovery in the key U.S. market and a slowing Chinese economy seem to have only put a dent in diamond sales. It appears the 1-percenters and even buyers of more modest means aren't completely shunning the bling.

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"Global diamond jewellery sales have risen again," said Richard Chetwode, vice-president of corporate development at Harry Winston Diamond Corp., one of the world's top diamond producers and high-end retailers.

"Our business is doing very well."

"We've had a golden week in China, the start of trade buying season," he said.

Don't expect the 25-per-cent year-over-year growth for diamond sales that China has posted over the past several years, but quite robust demand nonetheless, said Mr. Chetwode.

The world market has been helped by cutbacks in production by key players such as De Beers SA and the stockpiling of diamonds by the Russian government, which have helped reduce supply.

David Preger, global head of corporate affairs at De Beers Group, says he's looking forward to an acceptable level of sales during the holiday season, which extends from U.S. Thanksgiving in November, through Diwali in India (an important market), Christmas, Chinese New Year and Valentine's Day in February.

"Based on the trade shows and the investments folks are putting into them, we're cautiously optimistic," said Mr. Preger.

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"We anticipate low to mid-single-digit growth by the end of the year, which is modest but certainly surpasses our expectations."

De Beers reported in August that growth in global diamond demand could slip this year to between 3 and 5 per cent, from 11 per cent in 2011.

Mr. Chetwode said the United States market – which represents almost 40 per cent of the global diamond jewellery market – is slowly bouncing back.

Mr. Preger says just about all the ground that was lost in the brutal 2008-2009 period, at the height of the financial meltdown, has been regained.

It's still not clear to what extent shoppers this year will opt for more modest gems rather than spring for diamonds of more than 3 carats, said Mr. Chetwode.

Of course, consumers have kept the faith through thick and thin when it comes to buying the perennials, such as engagement rings, said Mr. Preger.

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Other basic – if such a word can be used when speaking of diamonds – items such as diamond-stud earrings are doing well, he said.

"For us, this has been a kind of return to basics," he said.

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