TOCOM ends higher tracking Nikkei, but down on week

Benchmark Tokyo rubber futures recovered from early losses and ended higher on Friday, helped by higher Nikkei stock prices, but were down for a second straight week amid fears over US-Sino trade spats which may hurt demand in the world's top buyer China.

The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery finished 0.9 yen, or 0.5%, higher at 168.0 yen (US$1.5) per kg, but not far from a 22-month low hit earlier this week.

The TOCOM futures, which set the tone for rubber prices in Southeast Asia, lost 1.6% for the week.

External factors such as higher Nikkei stock index supported rubber prices to rebound later in the session," said Toshitaka Tazawa, an analyst at commodities broker Fujitomi Co.

Japanese shares closed higher on Friday, taking comfort from signs of rapprochement between the United States and Europe over trade issues, though investors remained cautious ahead of next week's Bank of Japan policy review.

Oil prices edged lower on Friday in quiet trading after three days of gains, but took support from Saudi Arabia halting crude transport through a key shipping lane, falling US inventories and easing trade tensions between Washington and Europe.

The most-active rubber contract on the Shanghai futures exchange for September delivery fell 10 yuan to finish at 10,285 yuan (US$1,508) per tonne as concerns about oversupply persisted.

Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 0.4% from last Friday, the exchange said on Friday.

Thailand plans a yearly "supply wipe" of up to 50,000 tonnes of natural rubber output by reducing the country's rubber growing areas, to try to stimulate international prices, the Rubber Authority of Thailand told Reuters on Thursday.

"The Thai news is positive, but investors are more worried about possible imposition of higher import tariffs on Japanese automobiles by the US administration," Tazawa said, predicting rubber markets will remain under pressure next week.

The front-month rubber contract on Singapore's SICOM exchange for August delivery last traded at 132.5 US cents per kg, down 0.1 cent.

(US$1 = 111.1300 yen)

(US$1 = 6.8196 Chinese yuan renminbi)