Key Tokyo rubber futures erased earlier losses and rose 2 percent on Thursday, helped by a rebound in oil prices above $70 a barrel. The key Tokyo Commodity Exchange rubber contract for March delivery was at 211.8 yen per kg at 0520 GMT, up 3.6 yen or 2 percent. Rubber futures fell earlier in the day on profit-taking after prices hit a three-week high near 210 yen in the previous session.
Industry sources in Asia say supplies are tight due to disruptions to shipments blamed on rain in Thailand and Malaysia and last week's deadly earthquake in Indonesia. Thailand is the world's top rubber supplier, followed by Indonesia and Malaysia. The physical rubber market was steady on Thursday after firming on supply concerns the previous day.
Traders said they were watching whether Chinese buyers would tap the market next week after returning from a long holiday. Markets in China, the world's top rubber consumer, are closed for a holiday from October 1-8.
Oil rebounded above $70 a barrel on Thursday, clawing back some of the previous session's losses, amid the market's exuberance over a global economic recovery getting underway, while a weak US dollar also lent support. The dollar remained weak on Thursday after stronger-than-expected Australian jobs data boosted the Australian dollar and fuelled general selling in the greenback. The US currency hovered near 8-1/2 month lows against the yen just above 88 yen.
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