Tokyo futures extend retreat from 5-week high (Dec 5)

TOKYO, Dec 5 (Reuters) – Key TOCOM rubber futures fell in slow trade on Wednesday, tracking weaker stocks and extending the previous day’s retreat from a five-week high on profit-taking.

While a weaker yen and upbeat economic data from China had pushed futures higher earlier in the week, weaker oil prices, concerns about falling demand and uncertainty about the U.S. economy and fiscal woes are now weighing on the market.

FUNDAMENTALS

* The most-active Tokyo Commodity Exchange rubber contract for May delivery <0#2JRU:> was down 1.5 yen or 0.6 percent at 260.6 yen per kg as of 0032 GMT. It had earlier fallen as low as 259.2 yen.

* The benchmark contract hit a five-week high of 264.3 yen in Monday’s evening session, which counts as part of Tuesday’s trade, but later succumbed to profit-taking.

* Markets fear the United States could slip into recession if $600 billion in tax hikes and spending cuts are allowed to start taking effect in January. The White House and Congress have yet to agree on a long-term deficit reduction plan.

* China will maintain its fine-tuning of economic policies in 2013 to ensure stable economic growth, state television quoted Chinese Communist Party chief Xi Jinping as saying on Tuesday.

MARKET NEWS

* Japan’s Nikkei share average extended the previous session’s losses on Wednesday as investor sentiment soured after Wall Street eased on concerns over the U.S. budget tangle.

* The dollar traded at around 81.85 yen, retreating further from a near eight-month high of 82.82 yen hit in late November.

* Oil prices fell on Tuesday, as concerns about the U.S. budget crisis and global fuel demand outweighed ongoing worries about instability in the Middle East.

DATA EVENTS

* The following data is expected on Wednesday:

0030 Australia GDP

0858 Euro zone Markit Services PMI Nov