Rubber climbs for second day on ECB moves

Rubber advanced, paring a weekly decline, on speculation that a plan by the European Central Bank and international policy makers to lend dollars to euro-area banks will contain credit crisis and support economic growth.

February-delivery rubber climbed as much as 1.7 per cent to ¥367 a kilogramme ($4,780 a metric tonne) and traded at ¥365.90 on the Tokyo Commodity Exchange at 2:01pm local time.

Asian stocks extended a global rally, and oil headed for a fourth week of gains in New York after the European Central Bank said it worked with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to extend three- month loans to euro-area banks.

“The ECB plan alleviated worries that the European crisis may worsen, spurring investors to buy back riskier assets,” said Kazuhiko Saito, analyst at broker Fujitomi Co in Tokyo. “Rubber tracked gains in oil and other industrial materials.”

European Central Bank President Jean-Claude Trichet pressed euro-area governments to take decisive action to halt the debt crisis, after the ECB bought them more time by extending an emergency lifeline to lenders. Trichet said finance ministers meeting in Wroclaw, Poland today need to show the same “unity of purpose” as central banks did yesterday in providing extra dollars to European banks bruised by the crisis.

“Anything that suggests they will act proactively to avoid another Lehman-style crisis will help equities, commodities and other risk assets because of how oversold they are, and how bearishly everybody is positioned,” said Prasad Patkar, who helps manage about $1.1 billion at Platypus Asset Management Ltd in Sydney.

Rubber has lost 0.7 per cent this week, extending last week’s decline, on concern that the global economy may slip back into a recession on European-debt crisis and slowing US economic growth.

In Shanghai, rubber for January delivery traded 0.9 per cent higher at 33,365 yuan ($5,227) a tonne at 1:46pm local time.

The cash price of Thai rubber gained 0.9 per cent to 142.65 baht ($4.7) a kilogramme yesterday, according to the Rubber Research Institute of Thailand. Rains spread across the country’s southern region disrupted tapping, it said.

“Rubber prices were also supported by optimism that demand for the commodity in Thailand will increase after the government provides incentives for consumers buying their first cars,” the institute said on its website.

Rubber also gained on speculation that China, the world’s biggest consumer, may increase purchases to replenish stockpiles before National Day holidays next month, Saito said.

Natural-rubber inventories monitored by the Shanghai Futures Exchange stood at 33,376 tonnes, the bourse said on September 9 based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin. The volume has more than halved from this year’s peak of 68,850 tonnes reached in January.