De Beers diamond sales tempered by India's cash crackdown

* India third biggest diamond market

* Indians have less cash for luxury purchases

* Sales still higher than a year ago (Adds detail, background, Gemfields (Frankfurt: A0HMWZ - news) emerald sale delayed)

LONDON, Dec 13 (Reuters) - Anglo American (LSE: AAL.L - news) 's latest De Beers diamond sale showed that demand had slowed after India's withdrawal of high-value banknotes, though it was higher than during the commodities slump of a year ago, the company said on Tuesday.

Prime Minister Narendra Modi's decision to scrap old 500 rupee ($7.40) and 1,000 rupee banknotes as part of a crackdown on tax evasion and counterfeiters has dented consumer spending in a country where most people are paid in cash and buy what they 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 is experiencing a temporary slowdown as a result of the demonetisation programme in India, demand across the rest of the product mix continued to be healthy," De Beers' CEO Bruce Cleaver said.

He had previously said that the second half of the year would 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 the centre of its strategy of focusing more sharply on high-value commodities, rather than bulk assets.

India is the third-biggest diamond jewellery market behind the United States and China, accounting for about 8 percent of global demand.

Typically, Indians purchase jewellery in cash and many do not have credit cards. In addition to withdrawing high-value notes from circulation, the government has also capped daily withdawals from cash machines at 2,000 rupees.

London-listed Gemfields said at the start of December that it was postponing the auction of predominantly higher-quality emeralds from its Kagem mine in Zambia to February because of the banknote crackdown and accompanying hit to consumer spending.

($1 = 67.4800 Indian rupees)

(Reporting by Barbara Lewis and Esha Vaish and Vidya L Nathan in Bengaluru; Editing by Mark Potter and David Goodman)