Rubber Futures in Tokyo Decline as Much as 5.7 Percent

Rubber Futures in Tokyo Decline as Much as 5.7 Percent

May 6 (Bloomberg) -- Rubber futures on the Tokyo Commodity Exchange declined as much as 5.7 percent. The October-delivery contract fell to 276.4 yen per kilogram as of 9:02 a.m. local time.

Rubber Extends Slump as European Debt Crisis Threatens Recovery

May 6 (Bloomberg) -- Rubber tumbled on speculation deepening sovereign debt risk in Europe may slow the region’s economic recovery and its demand for raw materials.

Futures in Tokyo fell as much as 6.4 percent, extending a 4.2 percent loss in the previous session, as investors returned after a three-day market holiday. Rubber fell 5.1 percent in April, the worst monthly performance since November 2008.

Commodities fell yesterday after Moody’s Investors Service said it may downgrade its rating for Portugal, increasing investor concern that Greece’s deficit crisis may be repeated in other European nations. Three people died in a fire set during protests in Athens against Greece’s planned spending cuts.

“Investors are cutting holdings of risk assets as European debt problems may undermine the stability of the financial system,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “Greece may have difficulty reducing its fiscal deficit amid the public anger.”

Rubber for October delivery, the most-active contract, fell as much as 18.7 yen to 274.3 yen per kilogram ($2,924 a metric ton) and traded at 278.7 yen on the Tokyo Commodity Exchange at 12:05 p.m. local time. Prices fell for a fourth day, extending the commodity’s decline from the 21-month high of 338.5 yen reached on April 16.

Rubber also dropped as China moved to slow lending growth, Saito said. China is the world’s largest consumer of the commodity used to make tires.

China Tightens Lending

The People’s Bank of China said on May 2 it will increase lenders’ reserve requirements, the latest official effort to curb property prices and prevent the world’s fastest-growing economy from overheating.

European Central Bank council member Axel Weber said yesterday Greece’s fiscal crisis is threatening “grave contagion effects” in the euro area.

Pacific Investment Management Co.’s Bill Gross told CNBC that Greece, Spain and Portugal may need to restructure debt, while Goldman Sachs Group Inc. Chief Economist Erik Nielsen said Greece may be forced to restructure next year.

The MSCI Asia Pacific Index dropped 1.7 percent to 120.55. Japan’s Nikkei 225 Stock Average slumped 3.2 percent.

“People are holding off on investing to see how far the impact of the Greece issues spread,” said Mitsushige Akino, who oversees the equivalent of $450 million at Ichiyoshi Investment Management Co. in Tokyo.

September-delivery rubber on the Shanghai Futures Exchange fell 0.3 percent to 22,830 yuan ($3,344) a ton at 11:05 a.m. local time.