TOKYO, July 31 (Reuters) – Key Tokyo rubber futures jumped 6 percent to a nine-month high above 190 yen on Friday, with traders saying speculative funds were pouring money into commodities such as rubber and oil.
* Technical charts have improved after the market broke above resistance near 180 yen late last week, and traders said momentum was building for a rise above 200 yen, a level last touched in early November.
* The key Tokyo Commodity Exchange rubber contract for January 2010 delivery <0#JRU:> settled up 11.1 yen or 6 percent at 195.8 yen per kg. Futures gained 8.8 percent on the week, the biggest weekly gain in about 7 months. The benchmark has risen about 21 percent in July.
* The key contract rose as high as 196.5 yen, the highest for a benchmark contract since Nov. 5, the last time a benchmark rose above 200 yen.
* A 10 yen rise from Thursday’s settlement in early trade triggered a circuit breaker which enables participants to trade beyond the trigger level after a five-minute halt in trading.
* “Technicals improved sharply as rubber prices broke above 190 yen along with a jump in oil prices, and if oil prices stay as firm as they have been, players are likely to want to test the next psychologically key level of 200 yen,” said Hitoshi Inagawa, senior manager at Yutaka Shoji Co.
* “Encouraged by favourable technical charts, speculative funds are buying and appear to be pushing prices higher. But other investors are still cautious due to sluggish demand for rubber and are worried Tokyo futures prices are getting expensive relative to overseas prices,” he said.
* “But funds seem to have the upper hand right now and other investors have no choice but to follow for fear of having to stock up on rubber when prices are much higher,” he said.
* Inagawa said volatility may rise next month as volume gets thin with the summer holidays.
* While it is not yet clear if there has been a recovery in demand, there may be some tightness in supplies as buyers have stuck to the sidelines amid an economic slump and inventories have dropped due to lower production.
* Japan’s crude rubber inventories fell 7.3 percent in the 10 days to July 20, bringing the inventory level to its lowest since December. [ID:nT14091]
* Japanese car manufacturers Honda Motor Co <7267.T> and Nissan Motor <7201.T> unexpectedly posted profits earlier this week and Mercedes-maker Daimler forecast improving performance this year but clear signs of sustained recovery for the world’s battered auto sector remained elusive. [ID:nLT277217]
* Other European automakers unveiled weak results for the first half of the year on Thursday and are set to keep tight control over costs but most predict an improvement in conditions for the rest of 2009. [ID:nLU365319]
* Oil extended gains well above $67 a barrel on Friday, after a 5.7 percent jump in the previous session, the biggest one-day gain since April 9, on U.S. data and earnings which renewed hopes of an economic recovery.

Source: Reuters

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