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* India third biggest diamond market
* Indians have less cash for luxury purchases
* Sales still higher than a year ago (Adds detail, background, Gemfields emerald sale delayed)
LONDON, Dec 13 (Reuters) - Anglo American's latestDe Beers diamond sale showed that demand had slowed afterIndia's withdrawal of high-value banknotes, though it was higherthan during the commodities slump of a year ago, the companysaid on Tuesday.
Prime Minister Narendra Modi's decision to scrap old 500rupee ($7.40) and 1,000 rupee banknotes as part of a crackdownon tax evasion and counterfeiters has dented consumer spendingin a country where most people are paid in cash and buy whatthey need with cash.
Anglo American said that rough diamond sales for De Beers'final sale of the year amounted to $418 million, compared with$476 million for the previous sales cycle this year.
The last sale of 2015 brought in $248 million.
"While the trade in lower-value rough diamonds isexperiencing a temporary slowdown as a result of thedemonetisation programme in India, demand across the rest of theproduct mix continued to be healthy," De Beers' CEO BruceCleaver said.
He had previously said that the second half of the yearwould be tougher after a recovery in the first six months as jewellers restocked following Christmas sales.
Anglo American has put its De Beers diamond business at thecentre of its strategy of focusing more sharply on high-valuecommodities, rather than bulk assets.
India is the third-biggest diamond jewellery market behindthe United States and China, accounting for about 8 percent ofglobal demand.
Typically, Indians purchase jewellery in cash and many donot have credit cards. In addition to withdrawing high-valuenotes from circulation, the government has also capped dailywithdawals from cash machines at 2,000 rupees.
London-listed Gemfields said at the start ofDecember that it was postponing the auction of predominantlyhigher-quality emeralds from its Kagem mine in Zambia toFebruary because of the banknote crackdown and accompanying hitto consumer spending. ($1 = 67.4800 Indian rupees)
(Reporting by Barbara Lewis and Esha Vaish and Vidya L Nathanin Bengaluru; Editing by Mark Potter and David Goodman)
