TOKYO: Japanese rubber futures rose to a 3-week high on Monday, tracking a gain in the Shanghai market and on hopes of more stimulus by China to shore up the economy and demand in the world’s top buyer.

The Osaka Exchange (OSE) rubber contract for June delivery finished 3.4 yen higher at 248.0 yen ($1.74) per kg. It touched the highest since Dec. 4 of 250.0 yen earlier in the session.

The rubber contract on the Shanghai futures exchange (SHFE) for May delivery rose 55 yuan to finish at 13,905 yuan ($1,949) per metric ton. The benchmark earlier reached 13,980 yuan, its highest since Nov. 28.

“Investors’ hope for more economic stimulus by Chinese government and anticipation for interest rate cuts by the Federal Reserve next year were behind the gains,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.

“Expectations of economic recovery in China and the U.S., which are driving the global economy, have supported the recent rally,” he said.

Japanese rubber futures higher

Five of China’s largest state banks lowered interest rates on some deposits on Friday, the third round of such cuts this year, offering the prospect of reduced lending costs at a time when the government is urging banks to support the economy.

Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 3.4% from a week earlier, the exchange said on Friday.

The OSE’s December contract expired at 245.0 yen on Friday.

Japan’s benchmark Nikkei average ended higher on Monday, underpinned by prospects for U.S. rate cuts.

Major Japanese auto manufacturers will invest 150 billion baht ($4.3 billion) in Thailand over the next five years, a Thai government spokesperson said on Monday, supporting the Southeast Asian country’s transition to making electric vehicles.

Singapore Exchange (SGX) was closed for Christmas Day holiday.