TOKYO, July 21 (Reuters) – Key Tokyo rubber futures hit their highest in more than two months on Tuesday on the back of firm oil prices, extending gains into a fifth session and marking the longest winning streak since early April.
* The key Tokyo Commodity Exchange rubber contract for December delivery <0#JRU:> rose to 177.4 yen per kg, the highest for a benchmark since May 11.
* The key contract settled at 174.6 yen, up 3.5 yen or 2 percent and taking its gains over the five sessions to 14 percent. Tokyo markets were closed on Monday for a national holiday.
* The TOCOM market has failed to break above 180 yen this year due to limited demand as automobile output remains low because of the economic slump. It last stood above 180 yen in November last year.
* In April, the TOCOM market rose for six sessions in a row to clear the 170 level, and later touched a year-to-date high of 179.7 yen.
* But a stock market rally and solid economic growth in China have increased hopes for a global recovery, lending support to commodities generally.
* “Buying by fund managers from the higher end of 150-160 yen has driven the TOCOM market higher. But their buying looks to be running out of steam now they have piled up long positions,” said a manager at a commodity brokerage in Tokyo.
* The Shanghai rubber futures market <0#SNR:> fell on Tuesday, snapping a five-day rising streak and capping further gains in Tokyo, traders said.
* On Monday the most active contract on Shanghai futures rallied to its strongest since October.
* “Buying by fund managers may restart if and when the TOCOM market tests an upside and clears the 180 yen level. But chances look slim for now,” the manager said.
* U.S. crude futures held onto recent gains on Tuesday as optimism over a global economic recovery sparked a rally in equity markets and a drop in the dollar. Attention is turning to the release of weekly U.S. inventory data later in the day to gauge whether talk of economic recovery is translating into real demand in the world’s top energy consumer. [O/R]
* Japan’s Nikkei share average <.N225> climbed 2.7 percent to its highest close in two weeks as optimism grew about a recovery in the U.S. economy, reviving investor appetite for riskier assets and lifting blue-chip exporters such as Canon Inc <7751.T>. [.T]
* U.S. stocks jumped on Monday, driving the S&P 500 to an eight-month closing high, after CIT Group Inc was thrown a lifeline to avoid bankruptcy, and investors bet corporate America would log another strong set of earnings this week. [.N]
* In the currency market, the dollar inched off the steepest of the week’s lows on Tuesday as the market awaited congressional testimony by Federal Reserve Chairman Ben Bernanke. [USD/]
* Against the yen, the dollar fell 0.3 percent to 93.90 yen , paring recent gains and nearing toward a five-month low below 92 yen hit earlier this month.
* A recent fall in the yen has fuelled investor appetite as it inflates yen-based commodity futures prices.

Source: Reuters

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