TOKYO: Key Tokyo rubber futures jumped 3.2 percent on Monday pulled higher by a robust Shanghai market as well as rises in oil and share prices, but many expect a fall back as uncertainty about the debt crisis in Europe caps any upside.
The key Tokyo Commodity Exchange rubber contract for March delivery settled up 12.9 yen at 291.5 yen per kg. It earlier rose as high as 295.5 yen, up 4.7 percent.
Shanghai rubber futures climbed, with the most active January contract hitting its limit-up at 26,465 yuan a tonne. The contract closed up 6.4 percent at 26,320 yuan per tonne, with volume expanding to 1,634,484 lots.
"Share rallies and the strong Shanghai market lent support, helping TOCOM rebound from Friday's low of 275.2 yen, while investors were also conscious of Thailand's measures to prop up rubber prices," said Naoki Asami, a chief broker at trading house Kanetsu.
"But as there's no silver-lining on the global economic horizon, the benchmark contract could fall and stay within the range of 280 yen to 300 yen for a while," he said.
Many expect Thailand's worst flooding in five decades to have little impact on rubber supply, with many factories, plantations and trading houses located in the south, which has not been impacted by the deluge. Thailand is the world's largest rubber producer.
Asami said a shortage of demand is more of a concern because many carmakers have halted production in the country.
More districts of Thailand's capital were on high alert on Monday with floods bearing down from northern Bangkok and authorities facing a race against time to pump water towards the sea and defend the business district.
High tech firms face delays in the delivery of computer parts, and the autos sector has been badly affected, particularly Japanese firms, with output trimmed by 6,000 units a day.
Brent neared $111 a barrel on Monday and US crude climbed above $88.50 as optimism over a solution to the euro zone's debt crisis and stronger Chinese manufacturing data drummed up investor confidence.
The dollar was flat against the yen, recovering from an all-time low of 75.78 yen hit on Friday, and was last at 76.23 yen.
Copyright Reuters, 2011
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