Nov. 2 (Bloomberg) -- Rubber tumbled for a third day to a one-week low on concern that Europe may fail to contain its debt crisis and after manufacturing in the U.S. and China declined, sapping investor appetite for the commodity used in tires.
April-delivery rubber lost as much as 3.4 percent to 287.8 yen a kilogram ($3,685 a metric ton), the lowest level since Oct. 26, before settling at 293 yen on the Tokyo Commodity Exchange.
Asian stocks declined, expanding a global sell-off, after Greek Prime Minister George Papandreou announced on Oct. 31 a parliamentary confidence vote and his desire to hold a referendum on Europe’s rescue pact. A rejection of the bailout plan would push the nation closer to default and worsen the debt crisis. Oil fell for a fourth day, cutting the appeal of natural rubber as an alternative to synthetics.
“The Greek announcement of referendum rekindled concerns about the European crisis, spurring investors to reduce holdings of riskier assets,” said Makiko Tsugata, a commodity analyst at research company Market Risk Advisory in Tokyo.
Greece will proceed with a referendum on the European Union’s financing package and Papandreou will win a vote of confidence in Parliament this week, government spokesman Angelos Tolkas said. The nation’s plan to hold a referendum poses a threat to financial stability in the region, Fitch Ratings said.
Manufacturing in the U.S. was close to stagnating, signaling raw material demand may weaken, data showed yesterday. The Institute for Supply Management’s factory index dropped to 50.8 last month from 51.6 in September. A reading of 52 was the median forecast in a Bloomberg News survey of economists.
Manufacturing weakened in China, reflecting Beijing’s efforts to cool its economy. A Chinese manufacturing index dropped for the first time in three months in October, the China Federation of Logistics and Purchasing said yesterday.
In Shanghai, January-delivery rubber gained 2.1 percent to close at 26,970 yuan ($4,243) a ton, erasing an earlier decline of 1.9 percent.
Prices were also pressured by a decline in car production after Thai floods caused supply disruptions, according to the Rubber Research Institute of Thailand. The benchmark Thai cash price slumped 4.1 percent to 117.15 baht ($3.80) a kilogram today, the group said on its website.
Honda Motor Co. plans to reduce production in Brazil, England and the Philippines because of parts shortages stemming from the floods in Thailand, Keitaro Yamamoto, a spokesman for the company, said by phone today.
--With reporting by Anna Mukai in Tokyo. Editors: Ovais Subhani, Richard Dobson
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