TOCOM posts biggest weekly gain since late Jan

Benchmark Tokyo rubber futures rose on Friday, helped by a weaker yen against the dollar, after stronger-than-expected U.S. economic data put the focus back on rate hikes, and posted a gain of nearly 5 percent for the week.

Data showed a sharp acceleration in U.S. factory activity in the mid-Atlantic region in May, and an unexpected drop in new applications for U.S. unemployment benefits.

A weaker yen makes yen-denominated assets more affordable, when purchased in other currencies.

The Tokyo Commodity Exchange (TOCOM) rubber contract for October delivery finished 1.6 yen or 0.7% higher at 224.9 yen (US$2.02) per kg, after diving to a low of 216.2 yen earlier in the session.

For the week, it increased 4.8%, the biggest weekly gain since late January.

"On top of the softer yen, firmer Shanghai prices and tight supply in the TOCOM warehouses supported the Tokyo prices," said Jiong Gu, an analyst with Yutaka Shoji Co.

The U.S. dollar edged back 0.1% to 111.36 yen, but managed to retain most of Thursday's gains.

The dollar was bruised earlier in the week, by worries political turmoil in Washington could delay efforts by U.S. President Donald Trump to implement his economic stimulus plans.

The most active rubber contract on the Shanghai Futures Exchange for September delivery rose 230 yuan to finish at 13,775 yuan (US$1,998.7) per tonne. It climbed 1% for the week.

The TOCOM contract for May delivery which is due to expire on May 25, soared 11% this week to close at 309.5 yen per kg, amid concerns over low physical supplies.

As of April 30, rubber inventories at TOCOM warehouses stood at 1,247 tonnes, down 85% from a year earlier, and the lowest since July 2010, a level low enough to pose a risk of sudden price swings.

Price volatility in the case of the nearest-month contract may last until its expiry, dealers said.

The front-month rubber contract on Singapore's SICOM exchange for June delivery last traded at 152.9 U.S. cents per kg, up 2.5 cents.

(US$1 = 6.8919 Chinese yuan)

(US$1 = 111.4700 yen)