Paris Settles with Diamond Heiress

TMZ 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.