SINGAPORE (Dow Jones)--Natural rubber futures on the Tokyo Commodity Exchange settled sharply lower Tuesday, with overall market sentiment damped due to continued political tensions in the Middle East and concerns over monetary tightening in China following Beijing's reserve requirement ratio hike Friday.
Benchmark Tocom July natural rubber futures fell as much as 5.1% intraday, at one point dipping below the psychologically important Y500-a-kilogram level before settling Y18.2 or 3.5% lower at Y506.7/kg.
"The trigger for the first wave of sharp declines in the morning was fund selling, but the tipping point was probably after the second circuit breaker was triggered (late in the trading day), as it sent more investors into long liquidation," a Tokyo-based commodities brokerage analyst said.
Tocom rubber was long due for a correction, as it has been "dangerously overbought for some time," he said. The benchmark contract hit a record high of Y535.7/kg Friday.
Immediate support is at Y500/kg, and the contract may slip to Y470/kg, said the analyst in Tokyo, but prices may rebound next month amid low-production season, as "buyers looking for cheaper rubber on the spot market will likely prompt gains in the futures market again."
Rubber futures traded at other Asian exchanges also fell Tuesday.
Benchmark May natural rubber on the Shanghai Futures Exchange settled CNY320 lower at Y40,175 a metric ton.
Benchmark September natural rubber futures on the Agricultural Futures Exchange of Thailand hit the THB4.4/kg daily lower limit and were trading limit-down at THB190.8/kg at 0734 GMT.
On the Singapore Commodity Exchange, ribbed smoked sheet 3-grade was untraded, while March technically specified rubber 20-grade was trading 17 U.S. cents lower at 547/kg at 0730 GMT.
(Source: http://online.wsj.com/article/BT-CO-20110222-701717.html)
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