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 Rubber Drops as Yen Surges to 15-Year High, Shares Slump on Growth Concern

BLOOMBERG - Rubber fell after Japan’s currency jumped to a 15-year high against the dollar, cutting the appeal of yen-based contracts, and as equities and commodities dropped amid concern that the global economic recovery may be faltering.

Futures in Tokyo lost as much as 1.2 percent to 296.3 yen per kilogram, retreating further from a four-month high of 302.5 yen per kilogram ($3,614 a metric ton) reached on Sept. 6. February-delivery rubber settled at 298.7 yen.

The yen advanced before the U.S. Federal Reserve releases its Beige Book business survey that may show the U.S. recovery is stalling. Risk aversion by investors also increased after German factory orders unexpectedly decreased in July, and Germany’s banking association said the nation’s lenders need to raise $135 billion because of new regulation, according to Hisaaki Tasaka, an analyst at Tokyo-based broker ACE Koeki Co.

“Industrial raw materials are vulnerable for selling amid concerns about the economic recovery,” Tasaka said by phone today. “Rubber tracked losses in oil and metals.”

The yen rose to 83.35 per dollar, the strongest since May 1995. The MSCI Asia Pacific Index sank 1.4 percent to 120.11.

‘Lingering Worries’

“There are lingering worries the U.S. economic recovery may be tepid,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “This is a negative for the dollar,” said Soma.

German factory orders, adjusted for seasonal swings and inflation, fell 2.2 percent from June, when they surged a revised 3.6 percent, the Economy Ministry in Berlin said yesterday. It’s the biggest drop since February 2009.

The Fed will release its survey of conditions in its 12 districts today before officials meet to review monetary policy on Sept. 21. The jobless rate in the U.S. is likely to approach 10 percent in coming months as the economy fails to grow enough to employ people rejoining the labor force, economists said.

Losses in rubber futures were limited as rain curbed supply from Thailand, the world’s largest producer and exporter.

The Thai cash price was unchanged at 109.20 baht ($3.50) per kilogram, according to the Rubber Research Institute of Thailand. Rubber availability remains thin as rains in southern Thailand, the country’s main plantation area, have disrupted tapping, it said.

January-delivery rubber on the Shanghai Futures Exchange gained 0.2 percent to close at 26,450 yuan ($3,892) a ton. It climbed to 26,645 yuan on Sept. 6, the highest level since July 2008, as accelerating growth in China’s car sales raised the outlook for demand.

Natural-rubber inventories monitored by the Shanghai exchange expanded 1,119 tons to 25,820 tons, the bourse said on Sept. 3.

To contact the reporter on this story: Aya Takada in Tokyo at