SINGAPORE: Japanese rubber futures reversed early gains on Monday, weighed down by a stronger yen and concerns about demand in top consumer China, although losses were limited by higher oil prices.

The Osaka Exchange (OSE) rubber contract for January delivery was down 1.4 yen, or 0.44%, at 316.3 yen ($2.06) per kg. The September rubber contract on the Shanghai Futures Exchange (SHFE) fell 40 yuan, or 0.28%, to finish at 14,345 yuan ($1,977.61) per metric ton.

The yen edged 0.14% higher to 153.51 against the dollar, reversing early declines, with sentiment still fragile following the Japanese currency’s best weekly rally since late April after a US tech-led stock rout ignited demand for safe-haven assets.

Traders are now looking ahead to policy decisions from the Bank of Japan and the Federal Reserve, both on Wednesday, for further direction. A stronger Japanese currency makes yen-denominated assets less affordable to overseas buyers.

China’s factory activity likely shrank for a third month in July, a Reuters poll showed, keeping alive expectations officials will need to release further stimulus as a protracted property crisis and job insecurity drag on growth.

Analysts expect the government to implement another round of property-supporting policy measures after a meeting of the Politburo, a top decision-making body of the ruling Communist Party, expected to take place this week.

Oil prices rose on fears of a widening conflict in the Middle East following a rocket strike in the Israeli-occupied Golan Heights. Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. The front-month August rubber contract on Singapore Exchange’s SICOM platform last traded at 162.1 US cents per kg, down 0.4%.