De Beers posted a 21 percent rise in 2011 earnings on the back of a record sales boom at the start of last year, but the diamond producer reported a dip in annual production and said it expected to continue to rein in output growth in 2012.

The diamond giant, 45 percent owned by miner Anglo American , said it expected jewellery demand to continue to grow thanks to improving U.S. demand and growth in China, though at a lower pace after 2011 records, amid uncertain markets.

It also said it would continue to prioritise maintenance at its mines as it awaited improved demand, and did not expect to increase production in 2012.

In its first full set of earnings since Anglo American agreed in November to take majority control of the diamond miner by buying out the Oppenheimer family stake, De Beers said earnings before interest, tax, depreciation and amortisation (EBITDA) totalled $1.7 billion (1.0 billion pounds).

Underlying earnings rose 62 percent to $968 million.

The diamond miner, which controls more than a third of the global rough diamond market, said sales of rough diamonds by its Diamond Trading Company were up 27 percent at $6.5 billion.

Prices for rough diamonds jumped by over a third in the first half to well above pre-crisis levels but fell sharply in the last five months of the year as investors fled luxury goods, prompting a drop despite a dearth of new mines, low inventories and rising Asian demand that have been lifting diamonds.

Over the full year, De Beers said DTC prices, which can outperform in a volatile market due to the nature of contracts, increased 29 percent.

Diamonds represented roughly 5 percent of Anglo's earnings in 2010, but that could rise to as much as a fifth of earnings by 2013, according to some analysts' estimates, as a result of shifts including the acquisition of the Oppenheimer stake.

Anglo said the contribution to its underlying earnings from its De Beers stake totalled $443 million in 2011.

De Beers, which vies for the spot of the world's largest diamond producer in carat terms with Russian state-owned miner Alrosa, said it recovered 31.3 million carats, down from 33 million a year earlier, due to lower production in the second half as the producer preferred to carry out maintenance and reduce production in the light of world diamond prices.

(Reporting by Clara Ferreira-Marques; editing by James Davey)