Rubber advances to three-week high as oil gains

Rubber advanced for a second day to the highest level in three weeks as a rally in crude oil and limited supplies from Thailand, the largest producer, boosted demand for the commodity used to make tires. Futures in Tokyo were also bolstered by a fall in Japan’s currency against the dollar, which raised the appeal of yen- denominated contracts. The yen weakened as signs that Asia- Pacific economies are recovering sapped demand for Japan’s currency as a refuge.

“Overall sentiment is bullish” given the gains in oil and other commodities, Kazunori Kokubo, general manager of the international business department at commodity broker Yutaka Shoji Co, said by phone from Tokyo. Rubber for November delivery, the most-active contract on the Tokyo Commodity Exchange, rose as much as 3 per cent to ¥281.90 per kilogram ($3,122 a metric tonne) before settling at ¥281.3. Earlier, it fell to ¥272 on concerns that Europe’s debt crisis may stall economic recovery in the region. Oil futures in New York climbed as much as 1.5 per cent, boosting the cost of making synthetic rubber from naphtha. The yen declined to 110.54 per euro as of 6:40am in London from 109.47 in New York on Wednesday. The most-active rubber contract gained 5.5 per cent this week, a second weekly gain, amid worries that there’s continued tight supply from major producing countries. The “supply situation hasn’t improved,” Kokubo said.