Feb. 10 (Bloomberg) — Rubber advanced for a second day as a rally in global equities and surging car sales in China, the world’s largest consumer, increased demand for the commodity used in tires.

Futures traded in Tokyo gained as much as 2.7 percent, rallying from a seven-week low yesterday. Asian stocks rose for a second day as concerns eased that sovereign debt problems may slow an economic recovery in Europe.

European officials said they were considering financial assistance for Greece, sending the yen and dollar lower and raising the appeal of commodities as an alternative investment. China’s passenger-car sales more than doubled in January after the government extended economic stimulus steps.

“Market sentiment improved as the possibility of a Greek bailout emerged,” Shuji Sugata, research manager at Mitsubishi Corp. Futures Ltd. in Tokyo, said today by phone. “Strong car data from China were also a positive incentive.”

Rubber for July delivery, the most-active contract, gained as much as 7.2 yen to 277.4 yen per kilogram ($3,089 a metric ton) on the Tokyo Commodity Exchange before settling at 276.5 yen. The price reached a 16-month high of 306 yen on Jan. 15.

Germany is considering assistance for Greece after the country’s deficit threatened the stability of financial markets, two lawmakers from Chancellor Angela Merkel’s governing coalition said. Olli Rehn, who takes over as European Union economic affairs commissioner today, said EU support for Greece will be discussed in the coming days.

Yen Drops

Rubber also gained as the Japanese currency weakened against the dollar, making yen-based contracts more attractive to investors.

The Japanese currency dropped to the lowest level against the dollar since Feb. 4, while the euro strengthened the most in almost a month versus the dollar yesterday.

China’s sales of cars, multipurpose vehicles and sport- utility vehicles increased to 1.32 million units in January, the China Association of Automobile Manufacturers said yesterday after the Tokyo market closed. Total sales, which include buses and trucks, more than doubled to a record 1.66 million units.

China extended subsidies for rural residents buying vehicles and increased funding for consumers trading in old models after similar measures last year helped the country surpass the U.S. as the world’s biggest auto market. Full-year sales this year may grow as much as 15 percent, said Ricon Xia, a Daiwa Institute of Research analyst.

“The government policies continue to show effects,” said Hong Kong-based Xia.

There is steady tire demand from consumers, especially China, said Felix Yeo, trading manager at the Singapore unit of Marubeni Corp. “Thailand is going into a low production season in the next few months and that is also a supportive factor,” he said.

May-delivery rubber surged as much as 5 percent to 23,280 yuan ($3,409) a ton on the Shanghai Futures Exchange before settling at 22,780 yuan. Prices fell to 21,650 yuan yesterday, the lowest level since Dec. 15.

Source: Bloomberg

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