TOKYO, May 18 (Reuters) – Benchmark Tokyo rubber futures erased early gains to end at a two-month low on Wednesday in line with weaker Shanghai futures and amid uncertainty over the Japanese economy despite stronger-than-expected GDP growth in the first quarter, brokers said. Tokyo Commodity Exchange (TOCOM) futures, which set the tone for tyre rubber prices in Southeast Asia, rose nearly 1 percent in early trade on firmer global oil prices.
O/R But the contract for October delivery JRUc6 0#2JRU: snapped gains to close 3.7 yen lower at 168.5 yen per kg, the lowest settlement since March 15. It earlier dropped to as low as 167.7 yen, the lowest since March 16. Japanese Prime Minister Shinzo Abe said on Wednesday that there was no change to his plan of proceeding with a scheduled sales tax hike next year unless a crisis of the scale of the collapse of Lehman Brothers, or a huge earthquake, hits the economy.
The comments, which were contrary to a weekend report that Abe had decided to delay a sales tax hike, hurt market sentiment, said a source with a Tokyo-based broker. “The sentiment is weak,” the source said.
Japan’s economy expanded at the fastest pace in a year in the first quarter, thanks in part to a leap year consumption boost, but analysts say the rebound was not strong enough to dispel concerns over a contraction in this quarter. The most-active rubber contract on the Shanghai futures exchange for September delivery SNRcv1 fell 210 yuan to finish at 11,100 yuan per tonne.
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The front-month rubber contract on Singapore’s SICOM exchange for June delivery STFc1 last traded at 135.60 U.S. cents per kg, down 4.3 cents.
(Reporting by Osamu Tsukimori; Editing by Biju Dwarakanath)
