TOKYO, Sept 17 (Reuters) - Benchmark Tokyo rubber futuresrose 0.5 percent on Tuesday, gaining for the first time in threedays and erasing an initial fall to a two-week low in themorning.
The benchmark rubber contract on the Tokyo CommodityExchange (TOCOM) for February delivery rose 1.4 yen tosettle at 273.4 yen ($2.77) per kg. Hurt by a stronger yen, theit earlier fell to as much as 268.4 yen, the lowest sincehitting 268.0 yen on Sept. 2.
Tokyo markets were closed on Monday for a national holiday.
"The markets have bounced back a little in a correction torecent declines," said a Tokyo-based industry source. "However,the fundamentals still seemed weak as producers were willing tosell reflecting abundant spot inventories."
The market initially started weaker in early trade,reflecting a stronger yen. The U.S. dollar was quoted around99.16 yen in Asia by 0736 GMT, down from 99.72 yen lateFriday.
A stronger yen makes dollar-based rubber cheaper andnormally encourages players to sell rubber contracts to cutlosses.
Protesters blocked a highway in southern Thailand for asecond day on Tuesday in a bid to force the government toincrease a subsidy for rubber farmers, even though a curfew wasimposed in the area after clashes with riot police on Monday.
Most farmers' groups have agreed in principle to thegovernment's offer of a 21.2 billion baht ($665 million)subsidy, which works out to around 10 baht per kg.
Rubber inventories in warehouses monitored by the ShanghaiFutures Exchange rose 1.5 percent from the previous week, theexchange said on Friday.
The most-active rubber contract on the Shanghai futuresexchange for January delivery rose 190 yuan to finishat 20,390 yuan ($3,300) per tonne.
The front-month rubber contract on Singapore's SICOMexchange for October delivery last traded at 237.70 U.S.cents per kg, down 1.2 cents. ($1 = 98.7900 Japanese yen) ($1 = 6.1203 Chinese yuan) (Reporting by Osamu Tsukimori; Editing by Sunil Nair)
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