Rubber Snaps Three-Day Rally as Concerns Grow Over U.S. Recovery

Rubber retreated from a six-week high after U.S. manufacturing unexpectedly contracted, raising concern that a recovery in the world’s biggest economy may stall.

Rubber for delivery in May lost as much as 1 percent to 261 yen a kilogram ($3,180 a metric ton) before trading at 261.4 yen on the Tokyo Commodity Exchange at 11:54 a.m. The most-active contract settled yesterday at the highest level since Oct. 18. Futures have lost 0.7 percent this year.

The Institute for Supply Management’s U.S. factory index fell to 49.5 in November from 51.7 a month earlier. Readings below 50 indicate contraction. Japan’s currency climbed against the dollar, cutting the appeal of yen-based contracts, after Republicans rejected President Barack Obama’s demands for tax increases and countered with a proposed $1.4 trillion in spending cuts and $800 billion in new revenue.

“The market came under pressure as the U.S. data failed to provide support and concerns about the fiscal cliff grew,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said today by phone.

Losses in futures were limited after better-than-expected sales of U.S. vehicles last month, he said. The annualized industry wide light-vehicle sales rate, adjusted for seasonal trends, accelerated to 15.5 million, beating the 15 million average estimate of analysts, to give the best monthly pace since 15.6 million in January 2008, according to Autodata Corp.

Replacement demand from owners of damaged vehicles and purchases deferred by Hurricane Sandy boosted U.S. light-vehicle sales for the eight largest automakers.

Rubber for delivery in May lost 0.4 percent to 24,210 yuan ($3,885) a ton on the Shanghai Futures Exchange. Thai rubber free-on-board gained 1.1 percent to 92.60 baht ($3.02) a kilogram yesterday, the Rubber Research Institute of Thailand said on its website.

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

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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