TOKYO: Benchmark Tokyo rubber futures slipped more than 2 percent on Wednesday, giving up the previous day's gains, as slumping oil prices and plunging Tokyo equities hurt market sentiment, prompting a flurry of fresh sells, dealers said.
The Tokyo Commodity Exchange rubber contract for June delivery finished down 3.4 yen, or 2.1 percent, at 156.7 yen ($1.35) per kg. It hit a fresh 3-week high of 161.1 yen in an overnight trade before investors rapidly unwound long positions following a drop in oil prices.
"Renewed pressure on oil prices was the main cause of the sharp selloff in Japanese stock prices, the U.S. dollar and rubber prices," said Satoru Yoshida, commodity analyst at Rakuten Securities.
"Nagging worries about slowing economic growth in China were also behind the sells," he said.
Crude futures slumped again in Asian trade on Wednesday, with U.S. oil dropping more than 3 percent towards $27 a barrel and its lowest since 2003, on worries about global oversupply.
Japan's benchmark Nikkei share average tumbled to a fresh 14-1/2-month low on Wednesday as global markets were battered by plunging crude prices.
China's volatile stock markets also fell more than 1 percent on Wednesday, though mounting chatter about imminent policy stimulus provided some support against the backdrop of a fresh slide in oil prices.
On the downside, the safe-haven yen soared on Wednesday as risk appetite soured after crude oil prices fell to near 13-year lows, dragging the dollar to a one-year low with investors trimming the chances of more tightening by the Federal Reserve.
The dollar sank below 116 yen for the first time in a year in London trade, hitting a low of 115.97 yen.
A stronger yen makes yen-denominated assets more expensive when purchased in other currencies.
"The rubber market is likely to stay bearish as long as oil prices keep falling," Yoshida said.
The front-month rubber contract on Singapore's SICOM exchange for February delivery last traded at 108.5 U.S. cents per kg, down 0.2 cent.
The most-active rubber contract on the Shanghai futures exchange for May delivery rose 50 yuan to finish at 10,265 yuan ($1,560.41) per tonne.
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