Tokyo rubber futures rebounded on Tuesday, supported by short-covering to adjust positions ahead of fiscal book closings the following day, but underlying sentiment stayed bearish due a dearth of strong factors, traders said.
Relatively solid short covering emerged by late trade after seeing strong technical support at 150 yen per kg for the key September contract, traders said.
Yen-denominated rubber futures have been vulnerable to selling from hedge funds, which have been slashing their positions in Japanese commodities, including rubber, due to the recent appreciation of the yen, traders said.
"It's about time that we saw some corrective buying ahead of the book closings, but besides such purchases there were no strong incentives to buy rubber," said a trader at a Japanese commodity brokerage.
"The market is more likely to test the downside in the near term," the trader said. The September rubber contract closed up 3.7 yen at 154.2 yen.
Other contracts closed up 1.4-3.3 yen and traders said they would watch the yen to determine trends.
The dollar was quoted at 105.75/80 yen, not far from its low of 105.16 yen hit last month.
The market showed muted reaction to Japanese industrial production figures, which signalled an improving outlook for the nation's economy.
Output fell 3.7 percent in February from a month, slightly more than the median forecast of a 3.4 percent decline in a Reuters survey of 25 economists last week.
But the government forecast manufacturers' output a key component and close proxy of industrial production would rise 0.5 percent in March and 4.2 percent in April.
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