Jan. 13 (Bloomberg) -- The rough diamond market recovered “significantly” in the second half of 2009 and will benefit this year as customers replenish inventories as the global economy improves, Petra Diamonds Ltd. said.

“The market has come back nicely with very encouraging signs,” Chief Executive Officer Johan Dippenaar said today in an interview. “We can see the numbers of dealers, cutters and polishers coming back in the market buying rough.”

Tiffany & Co, the world’s second-largest luxury-jewelry retailer, said yesterday that holiday sales rose after wealthy consumers started spending more. Debswana Diamond Co., the joint venture between De Beers and Botswana’s government, said today it will boost diamond production by 17 percent this year if improved demand holds.

Rough diamond prices rose in the second half after producers slashed production earlier in the year and gem dealers rebuilt stockpiles for Christmas. De Beers, the world’s largest producer, cut output 73 percent in the first half of 2009.

Christmas sales look “a bit better, but it’s quite a long way off blooming health,” Des Kilalea, a London-based analyst at RBC Capital Markets, said. “People aren’t as desperate as they were last year.”

“Confidence has returned to the rough diamond market, with financing now beginning to open again to the pipeline,” St. Helier, Jersey-based Petra said in a statement. “Certainly levels of competition for rough diamonds are now much closer to normal levels and serve to underpin the stability of the market.”

Petra said analyst reports of a rise in pre-Christmas jewelry sales in the U.S. bodes well for the rough diamond market this year. Sales at Tiffany’s main New York store increased 20 percent between Nov. 1 and Dec. 31.

Petra rose 1.25 pence, or 2.1 percent, to 61.5 pence in London trading.

To contact the reporter on this story: Thomas Biesheuvel in London tbiesheuvel@bloomberg.net.