  We explore the possibility that the steepening observed shortward of 1000A in
the energy distribution of quasars may result from absorption by dust, being
either intrinsic to the quasar environment or intergalactic. We find that a
dust extinction curve consisting of nanodiamonds, composed of terrestrial cubic
diamonds or with surface impurities as found in carbonaceous chondrite
meteorites, such as Allende, is successful in reproducing the sharp break
observed. The intergalactic dust model is partially successful in explaining
the shape of the composite energy distribution, but must be discarded in the
end, as the amount of crystalline dust required is unreasonable and would imply
an improbable fine tuning among the dust formation processes. The alternative
intrinsic dust model requires a mixture of both cubic diamonds and Allende
nanodiamonds and provide a better fit of the UV break. The gas column densities
implied are of the order 10^{20} cm^{-2} assuming solar metallicity for carbon
and full depletion of carbon into dust. The absorption only occurs in the
ultraviolet and is totally negligible in the visible. The minimum dust mass
required is of the order ~ 0.003 r_{pc}^{2}M_o, where r_{pc} is the distance in
parsec between the dust screen and the continuum source. The intrinsic dust
model reproduces the flux {\it rise} observed around 660A in key quasar spectra
quite well. We present indirect evidence of a shallow continuum break near 670A
(18.5 eV), which would be intrinsic to the quasar continuum.
