PARIS - Harry Winston Diamond Corp (HW.TO) is looking to sell its watch and jewellery business to concentrate on its mining business instead, and has been approaching potential buyers such as luxury groups LVMH (LVMH.PA) and PPR (PRTP.PA), a source close to the matter said.

"They are looking to sell these assets and are doing the rounds among potential buyers," one of the sources said.

Harry Winston, which started as a small jeweler in New York in 1924, was made famous by Marilyn Monroe's reference to the firm in the song "Diamonds Are a Girl's Best Friend".

Every year it lends hundreds of millions of dollars worth of jewels to actresses making red carpet appearance at events such as the Oscars.

The company, which owns 40 percent of the Diavik Diamond Mine joint venture, Canada's largest diamond miner, posted lower quarterly profits last month and said luxury demand had slowed as consumers had become increasingly cautious due the uncertainty in the global economy.

PPR, which owns jeweler Boucheron and watch brands Girard-Perregaux and JeanRichard, has always said it wanted to make acquisitions in "hard luxury," namely watches and jewellery.

LVMH, the world's biggest luxury group, which completed the acquisition of Italy's Bulgari last year, also owns jewelers Fred and Chaumet as well as watchmakers Tag Heuer, Hublot and Zenith and is also on the lookout for potential acquisitions.

Shares in Harry Winston, were up 7 percent on Wednesday in morning trade on the Toronto exchange at C$14.49.

Both PPR and LVMH declined to comment, as did a spokeswoman for Harry Winston.

(Reporting by Astrid Wendlandt)