DIAMOND MARKET OVERVIEW
Dealers reported steady sales as the trade prepares for the all-important JCK Las Vegas trade show June 2-6. Shortages are being reported in certain items, with some traders confirming inventories are continuing to fall in the highest end of the smaller sizes. However, there are also reports of some speculative buying in these areas waiting for prices to continue their rise. Economic growth and employment data in the US were disappointing. But the retail sector showed strong earnings. Tiffany reporting a stellar 26 rise in first quarter net income and raised its full year outlook. Signet had an even more impressive 50% jump in first quarter earnings. In the wider market, the main PolishedPrices index ended the week on a strong note, opening at 153.16 points on Friday, compared to Monday’s opening 150.96.

ROUGH MARKET
Dealers reported another strong week for rough, with the Diamdel tender giving a further boost to prices. “The market is very strong, goods at the Diamdel tender went for crazy prices,” said a dealer.  According to RBC Capital Markets,  jewellery demand from China and India and the US will be running ahead of supply. “New-mined output, will simply not be able to keep up with the potential growth in demand,” Des Kilalea of RBC Capital Markets said in a note following the fourth RBC Capital Markets Diamond Conference in London on May 25th. “In our view, the outlook for rough diamond prices is extremely positive," the RBC note said.

CORPORATE AND EVENTS
Tiffany & Co's sales in Japan did much better than expected after the March earthquake and tsunami there, and the upscale jeweler's sales soared in its other markets during the first quarter, sending shares to an all-time high, Reuters reported. Tiffany's sales were also strong in its home U.S. market, helped by a 23 percent rise at its famed Fifth Avenue store in Manhattan. Globally, sales were up 20 percent, the company said on Thursday. The company expects a modest decline in sales for the year in Japan, Tiffany Chief Financial Officer James Fernandez said on a conference call. It gets 18 percent of its total sales in Japan. "A lot of the worries about Japan can be put to rest," said Edward Jones analyst Matt Arnold. Sales in Japan, where the chain operates 57 stores, rose 7 percent during the quarter. Excluding the impact of the strong yen, sales fell 3 percent, but Tiffany initially thought in March they would fall 15 percent. In April, same-store sales rose 6 percent in Japan, according to the report. At the same time, middle-class shoppers are snapping up jewelry, as Signet Jewelers Ltd (SIG.N) (SIG.L) reported large U.S. sales gains, with strength at both its mid-market Kay Jewelers chain and its more upscale Jared stores. Zale Corp (ZLC.N) earlier this week also reported sales gains. "There is a targeted willingness to splurge again," Arnold said. There has been no "meaningful resistance" from customers over paying higher prices put in place to mitigate rising gold, silver and diamond costs, a Tiffany spokesman said on the call. Net income rose 25.8 percent to $81.1 million, or 63 cents per share, during the quarter that ended on April 30, from $64.4 million, or 50 cents a year earlier. Excluding one-time items, Tiffany earned 67 cents a share, beating Wall Street forecasts of 57 cents, according to Thomson Reuters I/B/E/S. Tiffany raised its full-year profit outlook by 10 cents and now expects to earn between $3.45 and $3.55 per share in the fiscal year that ends in January 2012. That compares with Wall Street forecasts of $3.33. Its shares rose $4.24, or 6.1 percent, to $74.28, an all-time high. Signet sales were up 5.6 percent to $45.99. Globally, Tiffany sales rose 20 percent to $761 million in the first quarter, with the largest gains in Asia outside Japan and in the Americas. Tiffany forecast Thursday that global net sales would rise by a mid-teens percentage in the current quarter, said the Reuters report.

Union leaders in Botswana dismissed last-ditch attempts by the government to broker a deal with striking public servants, and criticised the firing of nearly 1500 essential service workers, Business Day reported.  Teachers, medical personnel, most border officials and other state workers have been on strike since April 18. They have demanded a 12% wage increase against the government’s offer of 3%. The last wage increase was three years ago, the report said.  President Ian Khama said last week the government could not afford the workers’ demands as the fiscal deficit was forecast at 7 billion pula ($1,1bn) in the current fiscal year, it said. The Directorate of Public Service Management said it had served dismissal letters on 1478 government employees in essential services participating in the indefinite strike. "Areas include health services, electrical services, fire services, sewerage services and transport and telecommunications services," a directorate spokesman, Akanyang Mmoi, said. Andrew Motsamai, secretary-general of the Botswana Federation of Public Service Unions, said: "It was unacceptable because it does not come close to our offer. We had also wanted the unconditional reinstatement of our colleagues who have been dismissed from work."  The strike had reduced state orders for goods and services, delayed the issuing of business licences and permits and damped demand, the Botswana Confederation of Commerce, Industry and Manpower said.  Meanwhile, Bloomberg reported that Botswana’s government reopened state junior schools today after closing them last week because of violence during a strike by civil servants, the education ministry said. Most of the schools weren’t affected by the strike over pay, the Minister of Education Pelonomi Venson-Moitoi said on Gabz FM, an independent radio station based in the capital, Gaborone. Senior schools remain closed, she said. State employees in the world’s biggest diamond producer, including teachers and nurses, have been on strike since April 18. The government closed all state schools on May 16 because of fighting between students at senior schools and with police, said the Bloomberg report.