Reuters – Key TOCOM rubber futures fell to a four-week low on Monday, tracking falls in stock markets and oil and dampened by the yen’s advance, with investors concerned Europe’s deepening debt crisis could curb demand for the material.
Murcia on Sunday became the second Spanish region to say it would tap an 18-billion-euro ($22 billion) government programme to keep its finances afloat. Media reports said half a dozen governments were ready to follow in the footsteps of Valencia, which requested financial aid from the government on Friday, stoking fears that Spain may eventually need a full sovereign bailout.
The dollar fell below 78 yen to the lowest level since early June as investors dumped the euro against the yen. A stronger yen undermines yen-based TOCOM prices even though dollar-based prices in producing countries remain unchanged.
“Investors are going to be slow to regain their appetite for the TOCOM market because they are mostly being drawn to the red-hot rally in grain markets,” said Hiroyuki Kikukawa, general manager at trading company Nihon Unicom.
U.S. corn and soybeans pared recent gains on Monday but hovered near record highs marked last week as scorching temperatures and a relentless drought baked crops in the U.S. heartland.
Kikukawa said a fall in trading volumes meant high volatility for rubber prices and the TOCOM market could test a June trough of 227.8 yen later in the week given the likelihood of continued strength in the yen.
The benchmark contract fell as low as 231.4 yen, the lowest since June 25.
The most-active rubber contract on Shanghai rubber exchange for January delivery closed limit down at 22,810 yuan per tonne, compared with Friday’s 24,005 yuan.
The front-month August rubber contract on Singapore’s SICOM exchange was last traded at 283.0 U.S. cents per kg, down 8.9 cents.
In other markets, Japan’s Nikkei share average fell to a six-week low, while Brent crude slipped to $105 per barrel on Monday as fears about the global economy returned to the forefront. (Reporting by Risa Maeda; Editing by Chris Lewis)
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