TOCOM rises on short-covering after Shanghai futures surge

Benchmark Tokyo rubber futures rose on Monday as stronger Shanghai futures prompted short-covering, helping the market erase earlier losses, while higher oil prices and Tokyo equities lent support, dealers said.

The Tokyo Commodity Exchange (TOCOM) rubber contract for July delivery <0#2JRU:> finished 2.2 yen, or 1.4%, higher at 155.4 yen (US$1.38) per kg, rebounding from an earlier low of 151.8 yen.

"The TOCOM bounced back as a surge in Shanghai market triggered short-covering," said Kaname Gokon, Strategist, Okato Shoji Co, Ltd.

The most-active rubber contract on the Shanghai futures exchange for May delivery rose 195 yuan to finish at 10,705 yuan (US$1,642.37) per tonne. It earlier gained as high as 10,840 yuan.

Higher oil and stocks also gave psychological support, dealers said.

Oil prices jumped on Monday following steep losses in the previous session, supported by a fall in the US rig count, but analysts said general oversupply was keeping the market weak.

Japanese stocks rose in choppy trade on Monday as the yen backed away from Friday's 2½-year high against the Euro and one-week high against the dollar, burnishing market sentiment and giving relief to exporters that have come to rely on a weaker yen for profits.

The dollar flirted with the 113-yen mark throughout the day, against the one-week low of 112.28 hit on Friday.

The front-month rubber contract on Singapore's SICOM exchange for March delivery last traded at 110.3 US cents per kg, up 1.6 US cent.