TOCOM slides as investors square positions ahead of long weekend

Benchmark Tokyo rubber futures slid on Friday as investors squared positions ahead of a long weekend in Japan and China, but posted their second straight weekly gain amid expectations fresh US and Chinese tariffs on reciprocal imports would be less harsh than feared.

The Tokyo Commodity Exchange (TOCOM) rubber contract for February delivery finished 0.7 yen, or 0.4%, lower at 168.9 yen (US$1.5) per kg.

The TOCOM benchmark, which sets the tone for rubber prices in Southeast Asia, marked a 0.6% increase for the week.

"There were concerns over the escalating trade conflicts between the United States and China early this week, but that retreated later in the week, helping prices recover from their near 2-year lows," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

The benchmark contract touched the lowest since Oct 4, 2016 at 164.1 yen on Tuesday. The September contract expired on Friday at 145.0 yen per kg.

"The TOCOM is expected to stay between 165 yen and 175 yen next week," Kikukawa said.

Japanese Prime Minister Shinzo Abe will meet US President Donald Trump next week as fears grow in Tokyo that Washington could demand that Japan curb its car exports to the United States.

Japanese markets are closed on Monday for a national holiday.

The most-active rubber contract on the Shanghai futures exchange for January delivery rose 30 yuan to finish at 12,465 yuan (US$1,823) per tonne, before the Mid-Autumn Festival holiday, which starts on Saturday and lasts for three days.

Rubber inventories in warehouses monitored by the Shanghai Futures Exchange rose 1.0% from last Friday, the exchange said on Friday.

The front-month rubber contract on Singapore's SICOM exchange for October delivery last traded at 133.0 US cents per kg, down 0.3 cent.

(US$1 = 112.7900 yen)

(US$1 = 6.8390 Chinese yuan)