By Le-Min Lim and Scott Reyburn

Feb. 19 (Bloomberg) -- A 101-carat, nearflawless diamond may fetch more than $8 million at a Christie's International sale in Hong Kong, the first time a gem of this quality and weight is auctioned in Asia, according to the London-based company.

The squash-ball sized stone, highlight of Christie's jewelry sale on May 28, has the third-highest clarity rating of VVS1 and the third-best ranking on a scale used to measure colorlessness. Colored diamonds are graded on a different scale.

Christie's only identifies the seller as a Europe-based diamond trading company run by three brothers. The auction house said the stone had been discovered at the Premier diamond mine in South Africa, the largest and oldest diamond mine in the country.

Hong Kong is Christie's third-biggest auction market after New York and London. Growth in Asia outside Japan is accelerating, fueled by China's 10 percent-a-year expansion, as the U.S. economy stalls.

``The seller called us up in Asia and specifically said they want the gem sold in this region,'' said Vicki Sek, a Hong Kong- based director of jewelry at Christie's. The buyer gets the right to name the stone, Christie's said.

The colorless diamond is the fourth of more than 100 carats offered at auction, according to Francois Curiel, the company's global head of jewelry. The last three were in Geneva, he said.

Two Decades

Cut from a 460-carat rough stone, the gem is now on exhibition in London and is also the biggest white diamond at auction in nearly two decades, Christie's said. In 2005, the auction house sold a 120-carat brown diamond of lower clarity in Hong Kong. A carat is one-fifth of a gram.

In October, Christie's largest rival Sotheby's sold a flawless, 6.04-carat blue diamond in Hong Kong for HK$61.9 million ($7.9 million), a per-carat record for a gem.

``The market for big diamonds has gone up 20 percent in the last 18 months,'' Raymond Sancroft-Baker, Christie's European director of jewelry, said today when the stone was unveiled to the press in London. ``Diamonds are getting rarer.''

Sancroft-Baker said companies were no longer holding large diamond stockpiles and fewer stones were being dug out of the earth. He said that only one or two 100-carat diamonds were found per year.

During the London photo call the diamond slipped from the grasp of Christie's black-dressed staff-member Alexandra Jaffray and fell to the thickly carpeted floor.

``Lucky that didn't hit a chair,'' said a relieved Sancroft- Baker. ``Diamond is the hardest substance in the world, but it can chip.''

The record for any gemstone sold at auction is the $16.5 million with fees paid for the 100.1-carat ``Star of the Season'' pear-shaped colorless diamond at Sotheby's, Geneva in May, 1995.

To contact the reporters on this story: Le-Min Lim in Hong Kong at lmlim@bloomberg.net or Scott Reyburn in London at sreyburn@hotmail.com .