NEW YORK (Reuters) - The upcoming holiday season at upscale jeweler Tiffany & Co (TIF.N: Quote, Profile, Research, Stock Buzz) could be the beginning of renewed growth at its established U.S. stores, its chief executive told Reuters on Thursday.

Despite moderating sales expectations, Tiffany said it expects a "modest increase" in fourth-quarter same-store sales in the lackluster U.S. market.

"That, perhaps, is the beginning of a return to greater consumer confidence that would build throughout 2009," Chief Executive Michael Kowalski said in an interview after the company reported better-than-expected quarterly earnings.

Tiffany's shares jumped nearly 11 percent.

"Part of our optimism is driven by favorable year-over-year comparisons," he said. "I think probably more important is that we are very optimistic and confident in the new product lineup we have."

Kowalski said the U.S. market was still the most cautious, with shoppers concerned about the economy. Aspirational consumers -- those who buy under $500 -- were under the most pressure, he said.

The company has also seen soft sales of jewelry priced above $50,000 -- a sign that its most affluent customers are also thinking twice before spending.

Tiffany aims to entice customers within those extremes. For example, its new products will include pricier gold and platinum variations of its widely popular silver charms.

The company may need to watch if bankrupt jewelers like Whitehall Jewelers (WHJHQ.PK: Quote, Profile, Research, Stock Buzz) and Friedman's Inc sell their wares below market price.

"The aspirational customer is under some pressure," Kowalski said. "We have seen that in sales below $500, so that is something we need to be wary of. We cannot identify it as happening today, but it is a fair concern."

Kowalski brushed away concerns about a slowdown in international markets.

"Internationally, we have wonderful market share opportunities. Those opportunities are strong enough for us to overcome any economic headwinds," he said.

For the full year, Tiffany forecast a same-store sales increase in the low-teens percentages in Asia-Pacific stores outside Japan and low-double-digit growth in Europe, on a constant currency basis.

Tiffany uses higher-quality diamonds in its jewelry, which are always in short supply, Kowalski said, adding that he expects the shortage to continue for the foreseeable future. Besides other commodities like platinum and silver, labor makes up a significant part of costs for Tiffany.

Other jewelers like Zale Corp (ZLC.N: Quote, Profile, Research, Stock Buzz) have said they do not face a material impact from higher diamond prices since they don't seek higher-quality diamonds, which are pricier and often tough to procure.

A target of 150 to 170 stores in the United States in the long term, including smaller-format units, is "doable," Kowalski said, adding that Tiffany may reassess that number in five years. The company has about 75 in the U.S.

(Editing by Jeffrey Benkoe)