Tokyo futures down 0.4pc, momentum weak

TOKYO: Key Tokyo rubber futures ended down 0.4 percent on Wednesday as a sharp deterioration in economic conditions and worries about rising supply dampened sentiment, with the market wedged into a tight range seen in the past three months.

The key Tokyo Commodity Exchange rubber contract for January delivery settled down 1.4 yen at 362.4 yen per kg.

The most active Shanghai rubber contract for January delivery rose 0.9 percent to close at 34,100 yuan per tonne. Volume stood at 574,662 lots.

"With upward momentum very weak, the market is wedged in a very narrow range," said Naoki Asami, chief broker at trading house Kanetsu.

"European debt woes and worries of rising supply from producing countries kept investors sidelined, despite upbeat news of a recovery in car output in the United States and solid prices in Shanghai."

Asami expects the market to recover after hitting 355 yen, but could sag further if it breaks through the 340 yen mark.

The yen hovered near its all-time high at 76.25 yen versus the greenback on Wednesday, with traders expecting further upward pressure as they see limited likelihood of a dollar recovery given the lack of yen-selling intervention by the Bank of Japan over the past two weeks.

Brent crude rose on Wednesday, staying above $109 a barrel as a larger-than-expected draw down in U.S gasoline stocks and positive US economic data trumped concerns over the euro zone debt crisis.

Industrial output in the US recorded its best gain in seven months in July.

A meeting between French and German leaders didn't result in any concrete measures to combat Europe's sovereign debt problems.

The Nikkei average fell after the meeting.

China's top state planner on Wednesday said that the world's second-largest economy is expected to expand by 7 percent annually over the next five years.

Copyright Reuters, 2011