By Stephanie Nebehay

GENEVA (Reuters) - Auction houses offering royal jewels and rare luxury watches in Geneva next week shrug off any suggestion that the global economic downturn will dampen what they say is still a strong market for high-end pieces.

Christie's and Sotheby's are holding their spring jewellery sales in the Swiss city after two huge diamonds were stranded on the block at respective Hong Kong sales in April.

Senior jewellery experts at the companies voiced confidence that collectors and traders remained hungry for unique items, especially colored diamonds or historic gems, following world-record prices set for rare polished diamonds last year.

"There's a sub-prime crisis and thousands of bankers have lost their jobs, but this (art) market defies the laws of economics. Our sales are up six percent this year amid record prices," Francois Curiel, chairman of Christie's Europe, told reporters on Friday.

The Frenchman, who is also international jewellery director at Christie's, said there had been a "rush of new buyers including Russian, Chinese and Indians" in the past two years.

"People are looking to diversify their portfolios and our clients also see works of art as a hedge against inflation," Curiel told Reuters.

Christie's says its twin sales on May 14 boast a rare choice of large colored diamonds.

Its top lot is a 13.39 carat blue diamond, the largest blue diamond graded fancy intense in color ever to be auctioned, valued at $6-$8 million. A perfect heart-shaped yellow diamond weighing 21.40 carats could fetch 2.8 million Swiss francs.

David Bennett, chairman of Sotheby's international jewellery department for Europe and the Middle East, also voiced optimism.

"We see no indication at present of demand for this end of the market being in any way curtailed," he told Reuters.

MUSEUM PIECES

Bennett held a stunning diamond-studded corsage, designed as a floral branch by the French jeweler Maison Vever in around 1900, estimated to go for up to 235,000 Swiss francs ($222,300).

Sotheby's, which is holding three sales on May 15, is offering 63 lots from the gem box of Lily Marinho, widow of Brazilian media mogul Roberto Marinho and Horacio de Carvalho.

Now 87, the former Miss Paris is parting with a collection worth 5-8 million Swiss francs. It includes a pair of ear clips, each with a pear-shaped diamond weighing more than 11 carats.

"Lily likes large pieces -- it's Brazil. We expect a lot of interest from Latin America," Bennett said, recalling his visit to "Brazil's First Lady" at her Rio estate where flamingos roam.

The priciest lots at Sotheby's "Magnificent Jewels" sale are a pink diamond ring and a blue diamond ring, each estimated at over 2 million Swiss francs.

A pendant set with a huge 206.82 carat sapphire and surrounded by diamonds, made by Cartier in 1951 for the Duchess of Windsor, is estimated at 1.1-1.5 million Swiss francs.

At Sotheby's watch sale on Sunday, the star lot is a Patek Philippe chronograph wristwatch known as the "Trossi Leggenda." The auction house says it is "almost certainly unique" and could bring 2 million Swiss francs.

The huge 1932 watch originally belonged to Count Carlo Felice Trossi, president of Scuderia Ferrari and racing driver, pilot and speed boat racer who needed a practical timekeeper.