Tokyo rubber hits 2-mth high as funds shift back

TOKYO, May 14 (Reuters) - Tokyo rubber futures jumped to a
two-and-a-half-month high on Wednesday as strength in oil prices
and a weaker yen bolstered the market, with bullish technical
signals encouraging buying by investment funds.

* Physical rubber prices were strong, supported by supply
tightness as rain has prevented a return to normal output after
the end of the wintering dry season, when production falls.

* By 0118 GMT, the key Tokyo Commodity Exchange rubber
contract for distant October delivery <0#JRU:> was at 314.7 yen
per kg, up 0.8 yen or 0.3 percent from Tuesday's close.

* The benchmark distant contract rose as far as 315.7 yen --
the highest for a benchmark since Feb. 27.

* Technical sentiment was bullish, with the key contract
above all major moving average levels. The next key chart levels
would be 318.7 yen reached on Feb. 27 and 324.3 yen reached a day
earlier.

* The dollar inched higher against the yen on Wednesday after
stronger-than-expected U.S. retail sales data supported the view
that the Federal Reserve won't cut interest rates next month.
[ID:nT254482]

* U.S. crude oil futures maintained strength to hold near
$126 per barrel on Wednesday after they rallied the previous day
on a report that Iran said it was mulling a proposal to cut
production. [ID:nT337159]
(Reporting by Chikafumi Hodo; Editing by Hugh Lawson)