SINGAPORE: Japanese rubber futures rose on Tuesday, tracking stronger domestic equities, although they were still on track for a monthly decline as lacklustre domestic factory output and global recessionary fears continued to weigh on markets.

The Osaka Exchange rubber contract for August delivery was up 2.6 yen, or 1.2%, at 225.4 yen ($1.65) per kg, as of 0215 GMT. The benchmark contract is headed for a month-on-month decline of about 3%.

The rubber contract on the Shanghai futures exchange for May delivery was down 15 yuan, or 0.1%, at 12,505 yuan ($1,801) per tonne.

Japan’s benchmark Nikkei share average was up 0.47% in early trade. Japan’s factory output shrank at the fastest pace in eight months in January as declining overseas demand took a heavy toll on key industries such as auto and semiconductor equipment.

Oil prices steadied in early Asian trade on Tuesday after falling on strong US manufacturing data that raised worries about further interest rate hikes dampening demand, while analysts predicted another build in American crude inventories.

The natural rubber market is hindered by weaker oil prices, leaving manufacturers with no incentive to shift away from synthetic ones derived from oil, pushing the prices down.

Asian shares nudged higher on Tuesday, tracking small gains on Wall Street, while the US dollar paused after a sharp rally as month-end flows lift sentiment and investors adjust to expectations of more interest rate hikes.

The front-month rubber contract on Singapore Exchange’s SICOM platform for March delivery last traded at 136.4 US cents per kg, up 1%.