TOCOM recovers from 3-week low on oil’s rise and weak yen

Benchmark Tokyo rubber futures rose on Thursday, recovering from the three-week low hit the previous day, as firmer crude oil prices and a weak yen caused investors to cover their short positions, dealers said.

The Tokyo Commodity Exchange rubber contract for October delivery finished 2.1 yen, or 1 percent, higher at 217.7 yen ($1.80) per kg.

"Higher oil prices and weak yen lent a support to the market," said a Tokyo-based dealer who declined to be named.

Brent oil rose towards $66 a barrel on Thursday, gaining for a second day, supported by expectations that a global supply glut is starting to ease and by fighting in Iraq.

The U.S. dollar traded at 121.06 yen in late Asia trade, still near a two-month peak of 121.49 hit on Wednesday.

"I can't tell which direction the market is headed for. Investors will stay hesitant to take fresh positions until the May contract expires next Monday," he said.

The most-active rubber contract on the Shanghai futures exchange for September delivery rose 30 yuan to finish at 13,810 yuan ($2,228.93) per tonne.

"The market paid little attention to China's data," the dealer said.

Chinese factory activity contracted for a third month in May and output shrank at the fastest rate in just over a year, a private survey showed, indicating persistent weakness in the world's second-largest economy that requires increased policy support.

The front-month rubber contract on Singapore's SICOM exchange for June delivery last traded at 153.3 U.S. cents per kg, up 1.7 cent.