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Feb. 8 (Bloomberg) — Rubber declined for a third day to the lowest level in almost seven weeks as a strong dollar may weaken investor demand for commodities and a possible recall by Toyota Motor Corp. of its Prius cars may slow auto sales.
Futures in Tokyo fell as much as 0.7 percent to 266.2 yen per kilogram ($2,981 a metric ton), the lowest since Dec. 22. It slumped 5.3 percent on Feb. 5, the biggest daily loss since Sept. 14. The commodity used in tires has fallen 3.4 percent this year after reaching a 16-month high of 306 yen on Jan. 15.
The dollar climbed toward the highest level in eight months against the euro on speculation mounting budget deficits in some European nations will keep policymakers from raising interest rates. Toyota Motor Corp. will recall its 2010 model Prius hybrid car in Japan this week to repair a problem with the braking system, two people familiar with the matter said today.
“Prius has been the best-selling car in Japan because of its fuel-efficiency,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “Its recall could have a negative impact on car sales.”
Rubber for July delivery, the most-active contract, lost 0.5 percent to settle at 266.6 yen on the Tokyo Commodity Exchange.
Toyota, the world’s largest automaker, plans to recall at least 270,000 units of the gasoline-electric hatchback in Japan and the U.S. to repair braking systems, one person said, declining to be identified as the information isn’t yet public. Ririko Takeuchi, a Toyota spokeswoman, said the company hasn’t decided yet whether to conduct a recall.
Global Recalls
A recall of the model threatens to further tarnish Toyota’s reputation in its home market. The company has lost about $33 billion in market value since Jan. 21 amid expanding global recalls that until now haven’t included any models sold in Japan.
Rubber futures also came under pressure amid concern that U.S. job losses and European budget deficits may stifle a global economic recovery. The Reuters/Jefferies CRB Index of 19 raw materials reached the lowest level since Oct.6 on Feb. 5 as investors cut holdings of riskier assets.
The dollar and the yen advanced against the euro after Group of Seven finance ministers in Iqaluit, Canada, pledged to press ahead with economic stimulus measures amid concern about sovereign risk crises in nations including Greece, Portugal and Spain.
“As sovereign risks spread in the euro-zone, risk aversion will continue in the market,” said Susumu Kato, chief economist for Japan at Calyon Securities in Tokyo.
Losses in rubber futures were limited by speculation that lower prices may lure buyers from China, the largest consumer, ahead of the Lunar New Year holiday next week when markets close, Saito said. About 90 percent of natural rubber is used to make vehicle tires, he added.
May-delivery rubber on the Shanghai Futures Exchange lost 0.9 percent to 21,985 yuan ($3,220) a ton at 2:46 p.m. local time. Prices earlier fell to 21,975 yuan, the lowest level since Dec. 16.
Rubber inventories plunged 13,645 tons to 128,306 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the exchange said Feb. 5.
Source: Bloomberg