Benchmark Tokyo rubber futures edged up on Wednesday as investors unwound short positions ahead of a U.S. Federal Reserve policy statement due out later in the day while firmer Tokyo stocks also lent support, dealers said.
The Tokyo Commodity Exchange rubber contract for July delivery finished 0.6 yen higher at 158.9 yen ($1.34) per kg.
It rose above 160 yen in early trade, but worries about the Chinese equity market that had tanked over 6 percent in the previous session weighed on rubber prices, dealers said.
Chinese highly volatile shares ended lower again on Wednesday after plunging on Tuesday, taking losses in 2016 to about 22 percent or 12 trillion yuan ($1.83 trillion).
Japan's Nikkei, on the other hand, rose to a near two-week high after Wall Street rebounded, while investors were cautious ahead of the Fed meeting statement.
"TOCOM prices were buoyed as investors covered short positions ahead of the Fed statement as some of them have oversold," said Jiong Gu, an analyst with Yutaka Shoji Co.
The main focus on Wednesday was on the statement to be released by the Fed after its Jan. 26-27 policy review. While the central bank is almost certain to keep interest rates unchanged, investors are keen to see its latest economic outlook given the turbulent start to global financial markets this year.
On the downside, crude oil futures declined on Wednesday, heading back towards $30 a barrel as profit-taking wiped out a chunk of the gains notched up in the previous session on hopes for output cuts.
The dollar slipped 0.2 percent against the yen to 118.19 , staying within its 118.85 to 117.65 range seen so far this week.
The most-active rubber contract on the Shanghai futures exchange for May delivery rose 170 yuan to finish at 10,400 yuan ($1,581.72) per tonne.
The front-month rubber contract on Singapore's SICOM exchange for February delivery last traded at 106.0 U.S. cents per kg, down 1.8 cent.
