Tokyo rubber futures fell nearly 3 percent on Thursday as weak demand and falling crude oil prices continued to hurt market sentiment. The key Tokyo Commodity Exchange rubber contract for June delivery ended the morning session down 3.5 yen, or 2.7 percent, at 125.8 yen.
The key Tokyo rubber futures hit a one-month high approaching 140 yen on Monday on hopes for a scheme to raise prices that Thailand was due to begin drafting this week. But wariness over the bleak outlook for the automobile industry prompted players to take profits on recent gains.
Tokyo's key rubber futures contract hit a six-year low below 100 yen on December 5 on growing concern about demand for the commodity needed to make tyres. Tyres account for about 70 percent of rubber consumption. TOCOM rubber has fallen more than 60 percent from the year's peak of 356.9 yen marked at the end of June, as global automakers cut output due to the deepening economic slump.
The world's top three rubber producers, Thailand, Indonesia and Malaysia, agreed not to sell rubber at below $1.35 per kg at a meeting earlier this month held to discuss measures to help prop up prices. Members of the International Rubber Consortium (IRCo), which together produce about 70 percent of all natural rubber, also agreed to cut exports by 915,000 tonnes in 2009.
US crude settled at $35.35, down $3.63 or 9.3 percent, on Wednesday as another batch of gloomy data showed the US economy has fallen deeper into recession. The dollar held steady against the yen, up 0.1 percent at 90.50 yen, recovering some of its losses made after dismal US data on Wednesday. But the US currency hovered not far from a 13-year low near 87 yen hit earlier this month. Activity was expected to be slow for the most part due to the approach of the year-end. TOCOM will close on December 30, when it ends trade at noon.
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