* Jewellery, watch sales set to hit to record 5 bln euros
* Germans saving less because of low interest rates
* Shoppers looking for objects that keep their value
By Victoria Bryan
FRANKFURT, Dec 20 With record low interest rates
providing little incentive to open a bank account, canny Germans
are choosing a more glamorous place to put their money this
Christmas - jewellery.
Demand for diamond rings and gold watches is also being
fuelled by an uncertain economic outlook, which is making
shoppers in Europe's largest economy seek out gifts more likely
to retain - and possibly increase - their value.
The BVJ German association of jewellers and watch retailers
is forecasting sales of 5 billion euros ($6.6 billion) this
year, matching last year's record despite the euro zone crisis,
and with over a third of that to come over the Christmas season.
"If the trading we have seen in the last few days keeps up
we may even improve slightly on last year," BVJ managing
director Joachim Duenkelmann told Reuters.
The BVJ says Germans are looking for security against the
backdrop of the euro zone debt crisis, political uncertainty in
the Middle East and continuing low interest rates.
"People are investing in two things these days - diamonds
and property," said one shopper admiring diamond rings and a
single 2.1 carat diamond costing 63,000 euros in a window on
Frankfurt's exclusive Goethestrasse shopping street.
Interest rates in the euro zone are at an all-time low of
0.75 percent, and many economists expect the European Central
Bank to cut them further in early 2013 to try to revive the
bloc's ailing economy.
While European neighbours are tightening their belts, low
unemployment and rising wages are also encouraging Germans,
traditionally a nation of savers, to spend their cash.
Data from the Bundesbank shows the proportion of disposable
income that Germans put into savings stood at 8.8 percent in the
third quarter of this year, down sharply from 13.7 percent in
the first quarter, and compared with 10.4 percent in 2011.
"Consumers are therefore tending to put their finances into
purchases that will keep their value, instead of leaving them in
banks," market research group GfK said.
The BVJ says gold, platinum and diamonds are seen as
especially safe investments, and that while market prices of
these metals have soared, that has not necessarily translated
into sharply higher prices for jewellery.
Gold prices are up around 7 percent this year and set
for a 12th consecutive annual rise, driven by low interest
rates, concerns over the euro zone and diversification into
bullion by central banks.
HSBC on Tuesday raised its forecast for platinum prices
in 2013 and 2014.
A study by Ernst & Young shows that 26 percent of shoppers
in Germany were planning to buy jewellery as gifts this year, up
from 23 percent last year.
"No matter what happens to the piece of jewellery or to the
economy, the material value of precious metals and stones will
remain," the BVJ's Duenkelmann said.
German retailer Douglas may be battling stiff
competition from online retailers like Amazon at its
book stores, but says its Christ chain of 209 jewellery stores
is a bright spot.
"Sales of diamond jewellery are currently on the up -
whether as an investment or simply as a piece of beautiful
jewellery," Chief Executive Henning Kreke told Reuters.
In the first nine months of its 2011/2012 business year,
Douglas' jewellery arm saw a 10 percent rise in sales to 291
million euros, with core profit up 7.6 percent to 34 million.
Staff at high-end jewellers in Frankfurt reported good
demand for classic rings, necklaces and watches, especially
those with diamonds.
"People are looking for items that keep their value. We're
definitely doing more business than last year," said a sales
assistant at one jewellers who declined to be named because of