Rubber Climbs Second Day as Stocks' Rally Ease Growth Concern

By Aya Takada

Oct. 29 (Bloomberg) -- Natural rubber futures gained for a second day as a rally in global stocks eased concern an economic slump will reduce raw material demand and the falling Japanese currency boosted the appeal of yen-denominated contracts.

Futures in Tokyo gained as much as 12 yen after surging by the limit of 16 yen a kilogram yesterday. Asian stocks joined a global rally today and the yen booked its biggest decline since 1974 yesterday on speculation Japan will cut interest rates. A weaker yen supports futures as rubber trades globally in dollars.

``Rubber was bought back as surging equities worldwide improved investor sentiment,'' Kazuhiko Saito, strategist at Interes Capital Management Co. in Tokyo, said today by phone.

Rubber for April delivery added 3.5 percent to 172.4 yen a kilogram ($1,771 a metric ton) on the Tokyo Commodity Exchange at the 11 a.m. local time break. Prices reached a three-year low of 154.6 yen yesterday.

Futures also gained amid speculation that the world's largest rubber producers may agree on additional steps to raise prices of the commodity used to make car tires, Saito said.

Thailand, Indonesia and Malaysia will meet in Bangkok today to discuss a so-called Agreed Export Tonnage Scheme to co- ordinate export marketing, the Malaysian government said yesterday. They are seeking to boost prices as rubber futures plunged 52 percent from a 28-year high of 356.9 yen June 30.

Tree Chopping

Malaysia, the world's third-biggest rubber producer, plans to reduce supplies by chopping down old trees, the government said yesterday.

Malaysia expects to remove as much as 38,000 tons a year from the market by accelerating its replanting program involving 32,000 hectares of existing rubber land, Minister of Plantation Industries and Commodities Peter Chin said in a statement.

Indonesia, the world's second-largest rubber exporter, will urge growers to reduce the frequency of tree tapping to curb production by as much as 30 percent, Agriculture Minister Anton Apriyantono said Oct. 16.

January-delivery rubber on the Shanghai Futures Exchange, the most-active contract, lost 1.9 percent to 13,015 yuan ($1,914) a ton at 10:59 a.m. local time.

To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net