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Rubber Climbs to 7-Month High on Weak Yen, China Recovery Hopes

Dec. 25 (Bloomberg) -- Rubber advanced to the highest level since May as a weak Japanese currency boosted the appeal of yen-based contracts, and a rally in Chinese stocks raised optimism the world’s second-largest economy will pick up.

Rubber for delivery in June, the most-active by volume, gained 1.6 percent to settle at 292.1 yen a kilogram ($3,445 a metric ton) on the Tokyo Commodity Exchange, the highest since May 10. Futures have advanced 11 percent this year.

The yen fell to 84.96 per dollar, the weakest since April 2011, after incoming Prime Minister Shinzo Abe said he will consider changing the law governing the Bank of Japan unless it boosts its inflation target next month. Chinese equities rose, with a benchmark gauge wiping out losses this year.

“A weak yen gave the biggest support,” Takaki Shigemoto, an analyst at research company JSC Corp. in Tokyo, said by phone today. “Optimism about China’s economic expansion is also bolstering the futures.”

China is due to release figures this week on November profit for industrial companies, following an over 20 percent surge for earnings in October. The Shanghai Composite Index rallied 2.5 percent today.

Abe agreed with a coalition ally on a policy package that includes “bold monetary easing” to reach inflation of 2 percent. Abe is poised to become prime minister tomorrow after his Liberal Democratic Party’s coalition won a majority in parliamentary lower house elections on Dec. 16.

Rubber for May delivery gained 0.7 percent to close at 25,250 yuan ($4,051) a ton on the Shanghai Futures Exchange. Natural-rubber inventories gained 1,770 tons to 97,697 ton, the highest since March 2010, based on a survey of nine warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the bourse said Dec. 21.

Thai rubber free-on-board advanced 0.3 percent to 96.60 baht ($3.15) a kilogram, according to the Rubber Research Institute of Thailand.

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

To contact the editor responsible for this story: Jarrett Banks at jbanks15@bloomberg.net

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