Tokyo rubber futures ended more than 3 percent higher on Friday, heading for their biggest weekly gain since April, after equities jumped on optimism over Europe's initiative to solve its debt crisis. The most active rubber contract on Tokyo Commodity Exchange, currently April 2012, settled 9.3 yen a kg higher at 309.2 yen after rising as high as 316.2 yen as eurozone leaders struck deals to help end the bloc's two-year old debt crisis.
"I think we are going to see more rally, which could last until the end of next week. I think the next resistance is at the 330 yen level," said a dealer in Singapore, adding that gains will be driven by improving technicals. Shanghai rubber futures, which often track TOCOM rubber, hit its limit-high at 28,835 yuan a tonne immediately after the opening before ending at 27,815 yuan, up from Thursday's closing of 27,615 yuan.
But worries about slowing demand after floods in Thailand disrupted production of auto parts there and fears about defaults by top consumer China could also limit gains, dealers said. Physical rubber prices have dropped more than 30 percent to around $4 a kg from a lifetime high at $6.40 a kg in February, partly on worries about sagging demand from China and concerns the debt crisis in Europe could hurt demand for the commodity.
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