Diamond market optimistic for 2018 after good holidayseason. Polished prices supported by shortages of select goods as manufacturingstays below capacity. 1 ct. RAPI -5.3% in 2017, with +0.3% increase in Dec. asdifficult year ends on a positive note. Strong rough demand expected whenAlrosa and De Beers resume sales later this month. Positive outlook for ChineseNew Year (Feb. 16), with high-end consumer confidence boosted by recentstock-market rally. Hong Kong improving with Nov. jewelry, watch and luxurysales +8% to $783M. Titan Companyreports double-digit Diwali jewelry-sales growth. EU takes over as KimberleyProcess chair. Fancies: Fancy shapes mixed, with curves better than squares. Ovals hot,followed by Pears and Cushions as next-best shapes. Emeralds and Radiants okay,but Princesses still weak. Oversizes selling well. Steady demand forfine-quality 6 to 10 ct. Ovals, Pears and Emeralds, with limited supply. USdemand supporting market for commercial-quality, medium-priced fancies under 1ct. Far East demand improving as consumers seek fancy shapes at better prices.Off-make, poorly cut fancies illiquid and hard to sell, even at very deepdiscounts. United States: 47th Street quiet. Businesses slowly returning from Christmas-NewYear holiday, but snowstorm keeping buyers at home. Initial holiday retailreports positive. Dealers optimistic as they wait for holiday memo returns. Tradingexpected to increase in January as inventory levels declined during holidayseason. Consumer confidence high as stock-market rally continues. Belgium: Diamond trading slow with bourses closed until January 8. Dealersassessing first-quarter inventory needs. European holiday season mixed. UKjewelers report positive Christmas, but France and Italy sluggish. Rough tradequiet. Israel: Positive sentiment as dealers report good US holiday sales. Focus nowshifting to Far East for Chinese New Year. Suppliers maintaining firm priceswhen filling select orders. Polished inventory reduced in line with last year'slevels. India: Stable market drivenby Chinese New Year orders. US and Europe quiet during holiday break. SomeAntwerp dealers in Mumbai looking for goods. Dealers note positive trend fromconsumers in India, US and China. Rough trading quiet, with prices on secondarymarket firming. Manufacturing stable, with new polished slowly coming to themarket. Hong Kong: Polished trading slower but sentiment positive. Dealers optimisticfor coming Chinese New Year season with renewed retail growth in Hong Kong andChina. Steady demand for 0.30 to 0.60 ct., H-L, VS1-SI2 diamonds. Good demandfor 1 ct., F-J, VS-SI, RapSpec A2+ diamonds. Buyers working with tighterbudgets are shifting to lower color and clarity.