Rubber slumps to four-month low on Europe crisis, yen rally

Rubber tumbled to the lowest price in more than four months, erasing this year’s gains, on concern that Europe’s debt crisis may slow the global economic recovery and weaken demand for the commodity used to make tires.

Futures in Tokyo fell as much as 7.2 per cent to the lowest level since December 16, extending declines from the 21-month high of ¥338.5 ($3,707 a metric tonne) a kilogramme reached on April 16. The contract has dropped 4.4 per cent this year. The market also declined after the yen rose to a two-month high against the dollar, cutting the appeal of yen-based contracts.

Asian stocks declined, following a rout in US equities, on concern the European debt crisis will spread. Japan’s Nikkei 225 Stock Average sank 3.7 per cent to 10,295.63 as of 11:55 am in Tokyo. US stocks tumbled the most in a year yesterday, while the euro had the largest drop since the collapse of credit markets in 2008. September-delivery rubber on the Shanghai Futures Exchange fell 1.4 per cent to 22,355 yuan ($3,274) a tonne at 10:51 am local time. Earlier it dropped to 22,000 yuan, the lowest level since February 9.