Tokyo futures fall as economic worry weighs on oil, stocks

TOKYO: Key Tokyo rubber futures fell on Wednesday, erasing earlier gains as oil and equities dropped on concerns over the debt crisis in Europe and the global economic outlook.

The benchmark rubber contract on the Tokyo Commodity Exchange for February delivery fell 4.4 yen, or 1.2 percent, to settle at 360.5 yen per kg.

Over the past four sessions, the market has fallen below the key 50-day moving average, which stood at 372.2 yen on Wednesday.

The most active Shanghai rubber contract for January delivery fell 730 yuan to close at 32,950 yuan ($5,149) per tonne on Wednesday. Volume picked up to 869,178 lots from Tuesday's 645,890 lots.

Partly reflecting sluggish demand for rubber, data showed Japan's crude rubber inventories rose to a two-year high by Aug. 31, up 11 percent from August 20.

The Nikkei stock average skidded on Wednesday to a fresh 2-1/2 year closing low, as persistent worries about the European debt crisis prompted investors to take profits on the previous session's gains.

Oil fell on Wednesday, pulling US crude off six-week highs, as the dollar strengthened and investors saw little upside from declining inventories in an environment where the euro zone debacle is overshadowing tightening supply.

International alarm over Europe's debt crisis hit new heights on Tuesday, with US President Barack Obama pressing the bloc's big countries to show leadership as talk of a Greek default escalated and markets heaped pressure on Italy.

The euro dropped on Wednesday, back towards a seven-month low hit this week, with risk sentiment that was shaky ahead of debt talks between Greece, France and Germany further knocked by Australian inflation data.

Copyright Reuters, 2011