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Paris Settles with Diamond Heiress

8/22/2007 1:35 PM PDT BY TMZ STAFF

ExclusiveTMZ has learned Paris Hilton won't go to war with diamond heiress/arch-enemy Zeta Graff.

Graff sued Paris, claiming she slandered her in the New York Post by planting a story that Zeta ripped a necklace off of Paris' body as she allegedly danced to Barry Manilow's "Copacabana." Cheesy enough.

Jury selection began today, but sources tell TMZ the case was settled late yesterday afternoon. We don't have details on whether moolah changed hands.

A source close to the case tells TMZ that "both Paris and Zeta are happy to move past this and reconcile their differences."

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