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Rubber Drops From Five-Week High as Oil’s Drop Reduces Appeal

July 5 (Bloomberg) -- Rubber declined for the first time in four days as oil retreated from a one-month high in New York, reducing the appeal of the commodity as an alternative to synthetic products used to make tires.

December-delivery rubber fell 0.7 percent to 254.8 yen a kilogram ($3,201 a metric ton) on the Tokyo Commodity Exchange. The most-active contract has lost 3.3 percent this year.

Oil fell in New York amid speculation that fuel demand may decline on signs Europe’s economy is weakening after Germany’s services industries unexpectedly shrank last month. Asian stocks dropped, snapping a six-day winning streak, before German data forecast to show factory orders declined.

“Weak economic data from Europe reduced investor appetite for commodities,” Takaki Shigemoto, an analyst at research company JSC Corp. in Tokyo, said today by phone. “Rubber was sold in tandem with oil and metals.”

Losses in futures were limited amid expectations that the European Central Bank and the Bank of England will ease monetary policy, reviving demand for commodities, he said.

The ECB will probably cut its benchmark interest rate by 25 basis points to a record low 0.75 percent today, while the BOE is forecast to raise its target for bond purchases, according to economists in Bloomberg News surveys.

Rubber for September delivery gained 1.1 percent to close at 24,165 yuan ($3,803) a ton on the Shanghai Futures Exchange, climbing for an eighth day. Thai rubber free-on-board dropped 1 percent to 102.55 baht ($3.25) a kilogram today, according to the Rubber Research Institute of Thailand.

Thailand’s Rubber Estate Organization cut the price at which it will buy ribbed-smoked sheets from farmers by 0.8 percent to 95.41 baht a kilogram on July 6. That’s higher than the average auctioned price in three southern markets of 92.41 baht.

To contact the reporters on this story: Aya Takada at atakada2@bloomberg.net; Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

To contact the editor responsible for this story: Jarrett Banks at Jbanks15@bloomberg.net

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