Benchmark Tokyo rubber futures slumped on Thursday, surrendering earlier gains as a stronger yen and tumbling Tokyo stock prices battered market sentiment and sparked fresh selling, dealers said.
The Tokyo Commodity Exchange (TOCOM) rubber contract for November delivery finished 2 yen, or 1.3 percent, lower at 147.9 yen ($1.43) per kg, near a 4-month low hit the previous day. It rose to 151.7 yen earlier in the session on bargain hunting.
"A surge in the yen prompted selling in TOCOM," said Kaname Gokon, strategist at Okato Shoji Co Ltd.
The dollar hit a 21-month low against the yen at 103.58 on Thursday as the yen surged broadly after the Bank of Japan (BOJ) held off from expanding its monetary stimulus. The dollar last traded at 103.84 yen.
A stronger yen makes yen-denominated assets less affordable when purchased in other currencies.
The BOJ refrained from offering additional monetary stimulus on Thursday despite external headwinds and anaemic inflation, spiking the yen to a near two-year high that clouds an already darkening outlook for the economy.
Japanese share prices tumbled to 4-month lows on Thursday, as the BOJ's inaction, a cautious Fed that fuels the yen's strength and worries over Britain's possible departure from Europe all made for reasons to sell.
Further on the downside, oil prices fell on Thursday, heading for a sixth session of declines, following a lower-than-expected draw on U.S. stockpiles and amid worries Britain might leave the European Union (EU).
TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, have been swinging between gains and losses this week after falling for the seventh week in a row last week.
"Although there is no clear sense of direction, the benchmark may test February's low of 144.5 yen as it is getting so close. If it could not hold that level, the market may face a bigger downside risk," Gokon said.
The most-active rubber contract on the Shanghai futures exchange for September delivery rose 100 yuan to finish at 10,500 yuan ($1,595.67) per tonne.
The front-month rubber contract on Singapore's SICOM exchange for July delivery last traded at 122.5 U.S. cents per kg, down 0.4 cent.
