TOKYO, July 8 (Reuters) – Benchmark Tokyo rubber futures extended declines on Monday, falling 2 percent to settle at a one-week low, as worries about Beijing’s plans to choke off credit deepened concerns about global economic growth.
The benchmark rubber contract on the Tokyo Commodity Exchange (TOCOM) for December delivery initially rose in early morning trade on the back of a weaker yen, which makes yen-denominated assets more affordable when purchased in other currencies.
But the market has erased gains and headed lower after China’s Finance Ministry told central government agencies to cut expenditures by 5 percent this year, a move the official Xinhua news agency said was part of an austerity campaign launched by the country’s new leaders.
The benchmark contract fell 5.0 yen to settle at its intraday-low of 240.1 yen ($2.38) per kg.
“The gains from the morning were erased after news on 5 percent austerity measures, which hit Shanghai equities,” said a Tokyo-based broker who declined to be identified.
The most-active rubber contract on the Shanghai futures exchange for January delivery declined 800 yuan to finish at 17,295 yuan ($2,800) per tonne, after falling nearly 5 percent in afternoon trade.
The front-month rubber contract on Singapore’s SICOM exchange for August delivery last traded at 218.40 U.S. cents per kg, down 4.8 cents.
($1 = 100.9050 Japanese yen) ($1 = 6.1326 Chinese yuan)
(Reporting by Osamu Tsukimori; Editing by Anand Basu)
Source: Reuters
