Tokyo futures up 1.1 percent, caution weighs

The key Tokyo Commodity Exchange rubber contract for March delivery settled up 3.5 yen, or 1.1 percent, at 319.6 yen per kg after rising as high as 323.9 yen, up 2.4 percent.

The contract has recovered about 25 yen in the last five sessions, or about half of its 50.5 yen fall since Sept. 26.

The most active Shanghai rubber contract for January delivery climbed 1.4 percent to close at 28,220 yuan per tonne. Volume stood at 894,610 lots.

"There is news of limited supply from Thailand due to floods and government restrictions, but the European debt crisis and concerns about the US economy outweighed that," said Naoki Asami, chief broker at trading company Kanetsu.

"The upside is heavy and the market could move within a range of 300-325 yen for a while."

Brent crude held near $109 on Tuesday on cautious optimism that European banks may avert a financial crisis after leaders promised a plan to resolve the region's debt woes while a strike in OPEC member Kuwait threatened exports.

Industry analysts said on Monday that Thailand's worst flooding in five decades could disrupt the operations of automobile and parts makers that use the Southeast Asian country as a production base.

Toyota Motor said on Monday that it halted all three of its Thai factories, which have a combined production capacity of 650,000 vehicles a year, due to the flooding, while the shutdown continued with the first shift on Tuesday.

Car sales in India are expected to rise just 2 to 4 percent this fiscal year, an industry body said, cutting its forecast for the second time this year, as high interest rates and rising costs continue to hit demand in Asia's third-largest economy.

Indonesia's domestic car sales, an indicator of consumer consumption in Southeast Asia's biggest economy, rose 62.4 percent in September from a year ago, as bank lending rates remained low, industry data showed on Tuesday.

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