A `robust market' has reversed causing prices of rough diamonds in the major diamond trading centres - Antwerp (Belgium), Tel Aviv and India - to "tumble" in the past three months, dealers said.

Many of the cheap, smaller gems that are polished by Indian manufacturers and sold in the US are trading at a `discount' to De Beers' prices. US accounts for almost half the global diamond jewellery sales, which surged by six billion dollars to 56 billion dollars last year, according to De Beers'surveys.

The dealers said that in the first six months of this year, diamonds were changing hands at five per cent to 20 per cent above the quotes of De Beers' Centenary, the diamond company that controls about 60 per cent of the world supplies. "Sales and prices were surging in the first half of the year. But, there's now a surplus of diamonds in the market," according to the Association of Antwerp Diamond Dealers. European bankers said the downturn in diamond sales could be attributed to the diamond-dealer and manufacturer debt that is currently an excessive seven billion dollars. If dealers and manufacturers have excess debt, then they donot have more borrowing power to buy diamonds, they said.

De Beers', the South African-controlled, Swiss-based Corporation, purchases diamonds mainly from mines in South Africa and Russia and sells them to 125 select dealers, ten times a year during events that are called `sights'.At the `sights', the select dealers known as `sight-holders', purchase the gems and sell them to manufacturers that polish them for setting in jewellery. India accounts for a significant total of manufacturers. European dealers said De Beers' first two `sights' in the second-half of this year totalled only between $400 million to $500 million each, compared with an average of $700 million in the first half. The `sharp reduction' reflected the glut of diamond in the market, they said.