Key Tokyo rubber futues rose on Tuesday, benefiting from a recovery in oil prices and the yen staying weaker. Investors struggled to find fresh news to break prices out of their recent narrow ranges, as weakness in global demand and a bleak economic outlook dominated market sentiment. The key Tokyo Commodity Exchange rubber contract for August delivery ended the morning up 1.8 yen or 1.4 percent at 138.5 yen per kg.
Prices moved between 138.1 yen and 139.5 yen. Trading volume for the six contracts was less than 2,000 lots at the end of the morning session, reflecting subdued trade. The worlds top three rubber producing countries, which have agreed to reduce exports this year, are scheduled to meet the Chinese rubber association on Tuesday in Guangzhou, China, to discuss ways to cooperate to stabilise prices and avoid defaults.
"The market has been stuck in a technical range and the meeting will not be an impetus for a break-through," he said. Oil prices dipped to near $47 a barrel on Tuesday as news that US credit card defaults were on the rise pushed down equities. Oil rose over $1 per barrel on Monday as global stock market rallies outweighed Opecs decision not to cut production further.The dollar held above 98 yen, after rising to around 98.50 yen earlier.
A weaker yen helps support the rubber market as it inflates yen-based futures prices. The euro hit a five-week high against the dollar on Monday as gains in European stocks signalled investors willingness to take on more risk. Trading was subdued in the physical market, keeping prices unchanged from Monday.
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