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Rubber Advances as Yen Near Lowest in Four Years Raises Appeal

May 20 (Bloomberg) -- Rubber advanced to a one-week high after Japan’s currency slid to the lowest level in more than four years, boosting the appeal of yen-denominated futures.

The contract for delivery in October on the Tokyo Commodity Exchange gained 0.6 percent to settle at 289.5 yen a kilogram ($2,823 a metric ton), the highest level at the close since May 13. Futures pared this year’s loss to 4.3 percent.

The yen traded at 102.63 per dollar after touching 103.31 on May 17, the weakest level since October 2008. Japan’s currency came under pressure after data showed U.S. leading indicators and consumer sentiment advanced more than estimated, adding to optimism that the recovery of the world’s largest economy may be picking up.

“A weakening yen gave the biggest support to rubber futures,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said by phone today.

American confidence in the economy climbed in May to the highest level in almost six years as rising real estate values and record stock prices boosted household wealth. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 83.7, the highest since July 2007.

Thai rubber free-on-board rose 1.1 percent to 89.85 baht ($3.01) a kilogram today, according to the Rubber Research Institute of Thailand. The nation, the biggest producer and exporter, is targeting a price of 110 baht a kilogram for this year and 2014, according to Thai Agriculture and Agricultural Cooperatives agency.

Rubber for delivery in September on the Shanghai Futures Exchange fell 0.4 percent to close at 20,510 yuan ($3,340) a ton. Natural-rubber inventories dropped for a second week by 930 tons to 120,160 tons, the bourse said on May 17 based on a survey of nine warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin.

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

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

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