The highly anticipated sale of the largest diamond ever to appear at an auction in Asia has failed. But demand for Chinese art, expensive watches and other collectors' items was strong at auction house Sotheby's spring sales in Hong Kong. Claudia Blume reports.

It was the star lot of Sotheby's jewelry auction at its annual spring sales in Hong Kong: a flawless, pear-shaped, 72-carat diamond, as big as a walnut. It was the largest diamond of its kind ever on offer at an auction in Asia, and Sotheby's had hoped to sell it for as much as $13 million.

But the sale fell through Thursday night after the final bid failed to meet the reserve price. Sotheby's spokesman Matthew Weigman says there was confusion among overseas buyers who placed their bids by phone.

"Bidders from different countries had miscalculated the exchange rate and were uncertain of what they had would have to pay so they retracted their bids," he explained. "We are currently negotiating a private sale of the diamond."

Other parts of this week's auction were more successful, however. Sotheby's set a new world record for the sale of a modern watch. A platinum Patek Philippe wrist watch went for $1.5 million.

Demand for Chinese contemporary art remained strong, with Sotheby's achieving record sales of almost $52 million. The art auction's highlight was Zhang Xiaogang's oil painting "Bloodline: The big family No. 3", which was sold for more than $6 million to a Taiwanese collector.

Weigman says that for the first time, the auction house offered art from Southeast Asia in at the Hong Kong sale.

"What we discovered was that the Southeast Asian paintings category benefited very much from being in Hong Kong because people who were here to buy Chinese art saw the Southeast Asian paintings and began to bid on them," he said. "So we brought new buyers into the market for Southeast Asian and Vietnamese paintings."

The sale of Southeast Asian art achieved about  $8 million, exceeding forecasts.