SINGAPORE: Japanese rubber futures on Wednesday tracked gains in the Shanghai market, as demand sentiment was lifted by hopes of an economic reopening in top buyer China, even as data showing sharply shrinking factory activity weighed.

The Osaka Exchange (OSE) rubber contract for June delivery was up 4.9 yen, or 2.3%, at 222.9 yen ($1.71) per kg as of 0200 GMT.

The OSE was closed on Tuesday for a market holiday in Japan. The rubber contract on the Shanghai futures exchange for May delivery was up 280 yuan, or 2.2%, at 13,120 yuan ($1,901) per tonne. Japan’s benchmark Nikkei share average opened down 0.99%.

Japanese factory activity fell in December at the sharpest pace in 26 months, a business survey showed on Wednesday, with companies seeing further declines amid a global economic slowdown.

China’s factory activity shrank at a sharper pace in December as surging COVID-19 infections disrupted production and weighed on demand after Beijing largely removed anti-virus curbs, a private sector survey showed on Tuesday.

Rubber demand sentiment has been mixed over the past month after China relaxed strict COVID-19 curbs, which was met with a fresh wave of new infections, limiting industrial activity and consumption. Asian equities were up, while the dollar was on the back foot after a steep spike overnight, with investors keenly awaiting minutes from the Federal Reserve’s last meeting to gauge the path forward for interest rates.