By Jae Hur and Aya Takada March 24 (Bloomberg) -- Natural rubber advanced on speculation that a firmer economic recovery will increase demand for the commodity used in tires. Futures on the Tokyo Commodity Exchange rallied as much as 0.7 percent as the MSCI Asia Pacific Index climbed to a two- month high as signs of growing demand for commodities boosted confidence in the strength of the global economic recovery. “Rubber got a boost from rising stock markets,” Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “This has encouraged investment sentiment in commodities, including rubber.” Rubber for August gained as much as 2.1 yen to 289.9 yen per kilogram ($3,202 a metric ton) on the Tokyo Commodity Exchange before ending at 288 yen. The most-active contract touched 290.3 yen yesterday, the highest price since March 15. The MSCI Asia Pacific Index rose 0.2 percent to 124.69 at 3:59 p.m. Tokyo time. The gauge has climbed from a more-than- two-month low on Feb. 8 as improving U.S. jobs data, a Federal Reserve pledge to keep borrowing costs low and a Japanese bank- lending program eased concern that budget deficits in Europe may derail the recovery. Still, rubber output from Indonesia, the second-largest producer, may decline to 2 million tons this year if unfavorable weather persists into the second half after rains disrupted first-quarter tapping, Asril Sutan Amir, chairman of the Rubber Association of Indonesia, said today in an interview. The news came about three minutes before the Tokyo market’s closing. December Forecast Amir had forecast in December that Indonesia may produce 2.5 million tons this year, up from 2.4 million tons in 2009. Most of the nation’s supply is grown on the island of Sumatra. Rubber for September delivery rose as much as 0.5 percent to 23,935 yuan ($3,506) a ton on the Shanghai Futures Exchange before settling at 23,665 yuan. Chinese imports of natural rubber surged 63 percent in the first two months of the year, the Association of Natural Rubber Producing Countries said on March 22. The natural rubber market has entered a “bullish phase” as buyers led by China boost imports, the association said in a newsletter. In the cash market, shippers in Thailand, the world’s largest producer and exporter, offered so-called RSS-3 grade rubber for May shipment at $3.30 per kilogram today, unchanged from yesterday, according to Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo. To contact the reporters on this story: Jae Hur in Tokyo at jhur1@bloomberg.netAya Takada in Tokyo atakada2@bloomberg.net

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