  The spectral energy distribution of quasars shows a sharp steepening of the
continuum shortward of ~ 1100 A. The steepening could be a result of dust
absorption. We present a dust extinction model which considers crystalline
carbon grains and compare it with SMC-like dust extinction consisting of a
mixture of silicate grains with graphite or amorphous carbon grains. We show
that the sharp break seen in individual quasar spectra of intermediate redshif
\~ 1-2 can be reproduced by dust absorption provided the extinction curve
consists of nanodiamonds, composed of terrestial cubic diamonds or of diamonds
similar to the presolar nanodiamonds found in primitive meteorites.
