Benchmark Tokyo rubber futures tumbled nearly 4 percent on Monday, giving up gains from earlier this month and hitting a 1-1/2 week low, as a slump in global shares and weaker oil prices dampened investors' risk appetite.
"A flurry of selling kicked in amid risk aversion in the light of slumping Wall Street and oil markets," said Jiong Gu, an analyst with Yutaka Shoji Co.
The Tokyo Commodity Exchange (TOCOM) rubber contract for February delivery finished 5.8 yen, or 3.7 percent, lower at 153.0 yen ($1.50) per kg, after touching the lowest since Sept. 1 of 152.6 yen.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, rose to a technical ceiling of 160 yen last week, but the benchmark failed to maintain or break above the level, weighed down by comments from the U.S. Federal Reserve officials that lifted bets on an interest rate hike.
Boston Fed President Eric Rosengren said in a speech on Friday that gradual interest rate increases might be in order with the U.S. economy at full employment and that low interest rates were increasing the chance of an overheated economy.
Japanese stocks posted their biggest decline in more than a month on Monday after comments by U.S. Fed officials sparked fears of a rate hike as soon as next week which sent U.S. stocks down last Friday.
Crude prices fell over 1.5 percent on Monday after U.S. oil drillers added rigs and producers adapt to cheaper crude, with speculators cutting positions betting on further price hikes.
"But further losses may be limited due to speculations that heavy rain and flood in Thailand may hurt output and distribution of rubber," Gu said.
The most-active rubber contract on the Shanghai futures exchange for January delivery plunged 420 yuan to finish at 12,360 yuan ($1,850.47) per tonne.
Singapore's financial markets were closed on Monday for a national holiday.
