UPDATE 1-Swatch sees stronger second half as China recovers-paper
* Hayek says Chinese demand is picking up slowly
* Swiss watch exports to China fell 19.4 pct in May
* Slowing Chinese economy has hit demand for watches (Adds background, shares)
ZURICH, June 28 (Reuters) - Swatch Group is confident that sales of watches will pick up in the second half of the year as demand in the important Chinese market picks up, Chief Executive Nick Hayek was quoted as saying.
Switzerland's watch industry has been grappling with weak demand in China, where a slowing economy and a crackdown on lavish gifts weigh on sales, and Europe, where austerity programmes hit consumer spending.
"I expect a stronger second half," Swiss newspaper Finanz und Wirtschaft quoted Hayek as saying on its website. "China is coming back slowly. Japan, the U.S. and Russia show a pleasing development."
Swatch shares, down around 14 percent from a record high hit in May, ticked higher on the report before pulling back. At 1106 GMT they were up 1.1 percent on the day, outperforming a 0.2 percent the European sector index for personal and household goods companies..
"It is a reassuring message - Swatch Group has declined amid concerns about the situation in China but overall the market is improving there - certainly in Hong Kong," said Jon Cox at Kepler Cheuvreux.
Swiss watch exports fell 3.9 percent in May, with Hong Kong and mainland China declining between 15 and 20 percent. During the first five months of the year, exports slid 10.2 percent to Hong Kong and 23.3 percent to China versus the year ago period.
With its entry-price Swatch brand and mid-price Tissot and Longines, Swatch Group, which also owns high-end Omega, is less exposed than peer Richemont to the very expensive watches targeted by the Chinese government's anti-corruption campaign.
Swatch Chairwoman Nayla Hayek said in April she expected double-digit sales growth in China this year for the group's mid- and entry-price products. (Reporting by Caroline Copley and Silke Koltrowitz; editing by Patrick Graham)
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