DiCaprio film may hurt diamond demand: analysts

By Martinne Geller

NEW YORK (Reuters) - "Blood Diamond," the Warner Bros. thriller that hits movie theaters on Friday, could spark public concern about illicit "conflict diamonds" and hurt demand during the key holiday shopping season, analysts said on Monday.

But any financial impact to retailers should be modest and brief, they added.

The film, staring Leonardo DiCaprio, highlights the precious gem's role in Sierra Leone's civil war during the 1990s. So-called conflict diamonds, or blood diamonds, refer to stones mined in war zones and sold illicitly to fund war, insurgencies and human rights abuses.

James Hurley, an analyst with research firm Telsey Group, said the movie will likely affect sentiment with its star power and advertising push.

But he doubts people will stop buying diamonds, which would hurt retailers such as Zale Corp., Tiffany & Co. Inc., Blue Nile Inc., and Signet Group Plc, which operates the Kay Jewelers chain, as well as diamond processor De Beers Group, which is 45-percent owned by mining company Anglo American Plc..

"What a diamond means and what it stands for has been ingrained in people's psyches for decades, if not centuries. That's a pretty powerful attachment to ... destroy with just one film," Hurley said.

CL King analyst William Armstrong said the movie would likely alter buying patterns for a small group of shoppers.

"But how much that would be ... I'd be very surprised if it was a material amount," Armstrong said, adding that the issue is not new and that large retailers already have strict programs in place to prevent or minimize the possibility that their diamonds have left a bloody trail.