TOKYO, Oct 23 (Reuters) – Tokyo rubber futures closed almost 6 percent higher on Thursday in roller coaster trade as active short-covering set in after a sell-off in Japanese shares ran out of steam and concerns eased about global demand.

* The key Tokyo Commodity Exchange rubber contract for March delivery <0#JRU:> closed up 10.5 yen or 5.8 percent at 191.2 yen per kg. It earlier fell as low as 164.9 yen, down 14 yen from the previous close and flirting with the daily 16-yen limit.

* Just before the close, the March contract rose as high as 196.5 yen.

* Tokyo’s Nikkei share average .N225 trimmed earlier losses and finished with a drop of 2.5 percent, recovering partly on a report that the U.S. government was mulling ways to limit home foreclosures. [ID:nBNG389655]

* But it is unclear if the TOCOM rubber market has hit a bottom and will recover.

* Takashi Ogura, director at Kanetsu Asset Management Co in Tokyo, said the market would easily test 160 yen unless a liquidity crunch in financial markets shows significant signs of improvement. “Sentiment would not change until a floor is confirmed as quite solid.”

* Fiat (FIA.MI: Quote, Profile, Research) and Hyundai Motor Co (005380.KS: Quote, Profile, Research) added to the gloom surrounding automakers on Thursday with bleak forecasts for next year as the global financial crisis takes its toll. [ID:nL0464508]

* Concern that demand would shrink amid growing fears of a global recession has caused TOCOM rubber to slide about 40 percent from early September to a trough of 159.3 yen on Friday, the lowest since July 2005.

* It later staged a rally to briefly top 200 yen on a temporary gain in oil prices.

* U.S. crude oil CLc1 edged up from a 16-month low marked the previous day as investors shifted focus to an emergency OPEC meeting expected to consider supply cuts. [O/R]

* Activity in the physical market was subdued as it was a public holiday in Thailand, the world’s biggest rubber producer.

Source:  Reuters

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