De Beers ramps up diamond output, upbeat for Xmas

* De Beers says stocks down 20-30 pct

* Believes Xmas 2009 will be better than Xmas 2008

By Philip Blenkinsop

ANTWERP, Belgium, June 4 (Reuters) - Diamond inventories have fallen to levels justifying a ramp-up of production with signs that the key Christmas sales season will be better this year than last, according to the head of De Beers, the world's largest diamond group.

Gareth Penny told a meeting of diamond dealers in Antwerp that rough stocks were 20-30 percent down from mid-2008 peaks.

"There is clear evidence that rough (diamond) stocks have come down to reasonably acceptable levels... I am hearing that more rough needs to come into the system," he said.

De Beers, 45 percent owned by mining conglomerate Anglo American PLC (AAL.L), slashed production in the first quarter by 90 percent from the last three months of 2008 and by 91 percent year-on-year.

But the diamond group, which has 41 percent of the rough market, has hiked output in the second quarter with the restart in April of the major Debswana mines, which accounted for over 65 percent of De Beers production in 2008.