TOKYO, Aug 17 (Reuters) – Tokyo rubber futures fell 6 percent to below 200 yen on Monday as oil prices extended losses to a two-week low on doubts about the global economic recovery, prompting funds to unwind their long positions.
* The key Tokyo Commodity Exchange rubber contract for January 2010 delivery <0#JRU:> stood at 195.5 yen per kg late on Monday, down 12.6 yen or 6 percent from Friday’s settlement of 208.1 yen.
* The fall of more than 10 yen triggered a circuit breaker which enables participants to trade beyond the trigger level after a five-minute halt in trading.
* Tokyo rubber futures rose to a 10-month high of 214 yen last week as technicals improved, prompting chart-based funds and other short-term players to build long positions. Traders have said prices were becoming expensive relative to fundamentals as demand remained weak due to an uncertain outlook for the economy.
* Japan’s economy grew 0.9 percent in the three months to June, marking the first expansion in five quarters on the back of exports and government stimulus spending, but analysts say it will be a long road to a sustained recovery.
* Data from China last week showed below-forecast growth in factory output and investment for July, underlining why senior officials keep reminding markets that recovery in the world’s third-largest economy is not yet on solid ground. [ID:nSP486673]
* “I think there is doubt whether China can really be the last resort for demand and support global economic recovery,” said Hitoshi Inagawa, a senior manager at Yutaka Shoji Co in Tokyo.
* “Such doubts are preventing or slowing cash flowing into commodities. Sluggish stocks may also be limiting investors’ cashflows and prompting them to save rather than invest,” he said.
* “If people grow more worried about the global economy shrinking rather than expanding, the market that has risen on fund buying will be exposed to a fast correction especially when there is no clear sign of a real pickup in demand,” Inagawa said.
* Traders said further liquidation of funds’ long positions could push key rubber futures prices towards 180 yen, which was a resistance point from November until late July.
* The Nikkei <.N225> stock average fell 3.1 percent on Monday in its biggest one-day fall in nearly five months. [.T]
* U.S. crude futures fell $1 to $66.51 a barrel in electronic trade on Monday, extending the previous day’s 4.3 percent drop, as Asian stocks plunged after poor U.S. economic data clouded the outlook for a quick global recovery. [O/R]
* The yen rose on Monday to its highest in more than two weeks against the euro, as the weak U.S. numbers spurred profit-taking in commodity-linked currencies. [USD/]

Source: Reuters

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