Rubber Drops for First Day in Seven on Economic Growth Concern

By Aya Takada

Feb. 12 (Bloomberg) -- Natural rubber futures declined for the first time in seven days on concern a U.S. bank-bailout plan may not be enough to contain the global financial crisis and help restore growth in economies.

Futures in Tokyo lost as much as 4.8 percent to the lowest since Feb. 4 after equity markets slumped on a lack of details in the bank rescue plan. The Japanese currency advanced against the dollar as investors sought a haven from financial turmoil, making the yen-denominated contracts less attractive to investors.

“Futures were sold as optimism for the U.S. plan turned to be skepticism,” Shuji Sugata, a research manager at Mitsubishi Corp. Futures & Securities Ltd., said today by phone.

Rubber for July delivery, the most-active contract, fell 2.9 percent to close at 140.6 yen a kilogram ($1,560 a metric ton) on the Tokyo Commodity Exchange.

U.S. Treasury Secretary Timothy Geithner, speaking yesterday to a Senate Budget Committee hearing, defended his strategy of taking time to work out the details of his plan to shore up the financial industry. Geithner announced two days ago a financial rescue plan that included as much as $2 trillion in funding for programs aimed at spurring new lending and addressing banks’ illiquid assets.

The yen rose for a fourth day against the dollar on concern U.S. measures to alleviate the financial crisis won’t be enough to revive the world’s largest economy. Rubber futures tend to move in the opposite direction to the yen as the commodity trades globally in dollars.

Shipments Curbed

Rubber futures gained 3.3 percent this year as the world’s three biggest exporters curb shipments to support prices that slumped 56 percent last year amid a global recession.

The cabinet in Thailand, the world’s largest producer and exporter, approved an 8-billion-baht budget Jan. 28 to underpin prices and the government said on its Web site it aims to draw 200,000 tons of rubber from the market.

The economy of Japan, the world’s third-largest rubber user, shrank at an annual pace of more than 10 percent last quarter amid an unprecedented collapse in exports and production, a report next week may show.

Gross domestic product for the three months ended Dec. 31 contracted an annualized 11.7 percent, the sharpest slowdown since the 1974 oil crisis, according to the median estimate of 24 economists surveyed by Bloomberg News. The Cabinet Office will release the report on Feb. 16 in Tokyo.

May-delivery rubber on the Shanghai Futures Exchange, the most-active contract, lost 0.1 percent to 13,420 yuan a ton.

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