Rubber gains as demand may rise on US data

Rubber climbed on speculation demand may increase after US manufacturing unexpectedly accelerated in June and Japan’s Tankan survey showed that companies expect demand to pick up, a sign the global economy is rebounding.

The December-delivery contract rose as much as 2.3 per cent to 372.4 yen a kilogram ($4,613 a metric tonne), the highest level since June 22, and traded at 371.6 yen on the Tokyo Commodity Exchange at 10:40am. The most-active contract lost 6.6 per cent in June and climbed to a record of 535.7 yen on February 18.

The Institute for Supply Management’s factory index rose to 55.3 last month from 53.5 in May, the first gain in four months. Economists surveyed by Bloomberg News estimated the index would drop to 52. Crude oil added as much as 0.4 percent after Europe authorised a loan payout for Greece, easing speculation the country’s debt crisis will derail the region’s economic recovery.

“The positive US manufacturing data supported the rubber market as well as oil and stocks,” said Hiroyuki Kikukawa, general manager of research at IDO Securities Co. Trading was relatively thin on Monday as US markets are closed for the Independence Day holiday, he said.

In Japan, companies forecast increased hiring and investment as demand picks up this year after the March earthquake triggered the biggest plunge in the Tankan survey of sentiment since 2009.

Large companies said they will boost capital spending 4.2 per cent in fiscal 2011, exceeding analysts’ forecasts for a 2.4 per cent increase. The quarterly Tankan index of sentiment at large manufacturers fell to minus 9 in June from 6 in March, the Bank of Japan said July 1. A negative number means pessimists outnumber optimists.

Bridgestone Corp, the world’s biggest tiremaker, gained as much as 3.2 per cent in Tokyo trading after saying it will raise prices of new bus and truck tyres in Japan by an average of 10 per cent. The company traded at 1,916 yen at 10:43am on the Tokyo Stock Exchange.

In Shanghai, September-delivery rubber gained 2.1 per cent to 32,605 yuan ($5,044) a tonne at 9:47am local time.