Key Tokyo rubber futures rose nearly 3 percent to top 200 yen on Wednesday with investors continuing to hunt for bargains as sentiment improved on a recovery in oil prices and growing optimism about the global economy. The key Tokyo Commodity Exchange rubber contract for February delivery rose 6.1 yen or 3 percent to 203.1 yen per kg, after earlier rising as high as 206.4 yen.
TOCOM rubber was hit by a broad sell-off on Monday after news of US trade restrictions on Chinese tyres sparked worries about demand. China's rubber association has urged the central government to increase tax rebates, reduce export tariffs and to buy more domestically-made tyres to offset the effect of new import duties imposed by the United States, state media reported on Wednesday. Some analysts said the market was poised to test the upside as technical charts suggested a bullish outlook.
Oil shed early losses and hovered near $71 a barrel on Wednesday as the dollar's fall to one-year lows and Asian equities' climb to 2009 highs drew investors back to risky assets on brightening signs of a US economic recovery. Rubber prices were resilient to a sharp gain in the yen, which dents sentiment as a stronger yen deflates yen-based futures prices. The yen jumped against the dollar on Wednesday, closing in on a seven-month high against the US currency after Japan's incoming finance minister said a strong yen had advantages for the nation's economy.