Aug. 28 (Bloomberg) — Rubber advanced to a two-week high, heading for a second monthly gain, as rallies in crude oil and stocks boosted optimism for an economic recovery, increasing demand for the commodity used to make tires.

Natural rubber in Tokyo added as much as 2.7 percent after oil rose 1.5 percent yesterday as equity gains lifted investor sentiment and the dollar weakened, boosting the appeal of commodities as a hedge against inflation. Oil has risen 4.9 percent this month, boosting the cost of synthetic products.

“Oil’s rally and rising equities have bolstered investor sentiment,” Hiroyuki Kikukawa, general manager of research at IDO Securities Co., said today by phone. “Futures may test the recent high of 214 yen.”

February-delivery rubber, which was listed on Aug. 26, rose as much as 5.6 yen to 212.4 yen a kilogram ($2,265 a metric ton), the highest intraday level since Aug. 14, on the Tokyo Commodity Exchange before settling at 210.9 yen. Prices have gained 7.9 percent this month after jumping 20 percent in July.

Crude oil for October delivery gained 0.5 percent to $72.82 a barrel on the New York Mercantile Exchange after rising $1.06 to $72.49 yesterday.

The MSCI Asia Pacific Index rose 0.6 percent to 113.61 as of 3:37 p.m. in Tokyo. The gauge has jumped 62 percent from a more than five-year low on March 9 on speculation government stimulus packages and lower borrowing costs will revive the global economy. In the U.S., the Standard & Poor’s 500 Index added 0.3 percent yesterday and the Dow Jones Industrial Average advanced 0.4 percent, rallying for the eighth straight day.

A report showing that the U.S. economy contracted less than expected in the second quarter. The total number of people collecting unemployment insurance fell to the lowest level since April, a sign that the economy is pulling out of the recession.

Toyota Output

Production by Toyota Motor Corp., Japan’s biggest automaker, dropped for a 12th straight month, declining 20 percent in July from a year earlier to 576,074 vehicles, the company said today. The number excludes Toyota’s affiliates Daihatsu Motor Co. and Hino Motors Ltd. Output by Honda Motor Co., the second-largest, dropped 24 percent to 258,972 vehicles last month, while Nissan Motor Co. built 265,623 vehicles, down 16 percent.

The output cut at Toyota was its smallest in nine months as government incentives spurred demand in the U.S., Japan and Europe, according to Bloomberg data. The company’s Corolla and Camry models were among the top five purchased under the U.S. “cash for clunkers” program, which ended Aug. 24 and generated almost 700,000 sales, according to the Transportation Department.

January-delivery rubber on the Shanghai Futures Exchange added 1.3 percent to 18,945 yuan ($2,773) a ton at 2:39 p.m. local time.

Source: Bloomberg

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