LONDON (Reuters) - Demand for polished diamonds is growing briskly in China and India but not quickly enough to make up for the drop in buying in the world's top market the United States, diamond entrepreneur Martin Rapaport said.

"We've seen a fundamental shift to Far Eastern markets so where the U.S. has declined and is not expected to pick up in the near future, we are seeing growth in India and China," Rapaport told Reuters television in an interview on Monday 7 September.

"(This) is probably going to carry the market in the future, as it will (in) other markets."

Sales of diamond jewellery have fallen sharply in the United States due to recession.

Rapaport, whose group holds periodic auctions in wholesale polished diamonds, later told a seminar that Chinese and Indian diamond demand were growing from a small base relative to demand in the United States.

"India and China are growing fast, but not big enough to compensate for weaker U.S. demand," Rapaport said, speaking at the International Jewellery London (IJL) trade show which runs from September 6-9.

"The U.S. and Europe are saturated," he added.

Rapaport said he believed global demand for diamonds would grow in coming years, driven by Chinese and Indian buying, and would outpace supply.

The Rapaport Group sold around 43,000 carats of polished diamonds at an auction held in the United States last week, Rapaport said. "Looks like we sold them all," he said.

"The tender sold out," he added.

"What we are doing is actually repositioning excess diamonds from the U.S. into India and other developing countries."

The auction, held from August 31 to September 3, was open to members of the international diamond trade including cutters, manufacturers, wholesalers and retailers.

Sizes and qualities ranged from -2.5 sieve plate assortments to certified stones of more than 3 carats.

Additional 2009 auctions will be held on November 16-19 and December 7-10.

By David Brough and Martina Fuchs