SINGAPORE: Japanese rubber futures rallied on Tuesday, as oil prices rose sharply in the previous session, but projections of slowing global economic growth and banking crisis concerns continued to drag trader sentiment.

The Osaka Exchange (OSE) rubber contract for September delivery was up 1.3 yen, or 0.6%, at 212.0 yen ($1.62) per kg as of 0202 GMT. The rubber contract on the Shanghai futures exchange (SHFE) for May delivery was up 85 yuan, or 0.7%, at 11,910 yuan ($1,731.89) per tonne.

Japan’s benchmark Nikkei average opened up 0.35%. Crude prices moved in a narrow range in early Asian trade on Tuesday after rallying more than $3 in the previous session, with oil markets focused on developments in the banking crisis as well as on supply concerns and indications of strengthening demand.

The natural rubber market is helped by stronger oil prices as manufacturers are incentivised to shift away from synthetic rubber that is derived from oil, driving natural rubber prices higher.

On global news, average potential global economic growth will slump to a three-decade low of 2.2% per year through 2030, ushering in a “lost decade” for the world’s economy, unless policymakers adopt ambitious initiatives to boost labour supply, productivity and investment, the World Bank warned on Monday.

Japanese Prime Minister Fumio Kishida said on Tuesday he is carefully monitoring developments in Japanese financial institutions in the wake of Western banking problems.

Global stocks advanced and US treasury yields rose on Tuesday morning, as banking woes were soothed by a deal backed by US regulators to acquire failed Silicon Valley Bank. The front-month rubber contract on Singapore Exchange’s SICOM platform for April delivery last traded at 133.2 US cents per kg, up 0.2%.