The market lacked a clear sense of direction after fresh sales from bearish operators squelched an upswing earlier this week, which had been triggered by news last Friday that Malaysia planned measures to prop up local rubber prices.

After marking a lifetime high of 84.2 yen per kg on last Monday, the benchmark September rubber futures on the Tokyo Commodity Exchange (TOCOM) retreated as far as 79.4 yen this week. On Friday it closed 0.9 yen higher at 80.5 yen.

"The short-lived rally proved the market's undertone remains bearish," one brokerage analyst said. "Rubber is under threat from oversupply and operators believe the fundamentals are unlikely to be improved by the measures planned by the Malaysian government."

Malaysia's primary industries minister Lim Keng Yaik saidlast week that the country may impose quotas on rubber imports and limit exports of the commodity.

Tocom rubber prices barely reacted to the minister's comments.

Another brokerage analyst expected Tocom benchmark rubber to move between 78 and 85 yen next week depending on the currency market, unless fresh fundamental factors emerge.

Technically driven buying will likely appear if the benchmark September contract dips below the key 80 yen level, providing support to the whole market, he said.

"But overall sentiment remains weak, as rubber supplies are abundant even though it is the wintering season now," the analyst said. "We cannot expect large declines in rubber supplies this year, because of unusual weather conditions in rubber-producing regions in southeast Asia."

Thailand said on last Thursday it would not sell rubber from its stockpile until current weak prices strengthened, but the news failed to alleviate oversupply concerns among Tocom participants, traders said.

Data released by theRubber Trade Association of Japan showed that crude rubber stocks at Japanese private warehouses were 37,315 tonnes as of March 20, up from 37,091 tonnes on March 10.

Some traders expected domestic stockpiles to reach 40,000 tonnes around the middle of this year. Thai rubber was offered to Japan at 61 US cents per kg on an FOB basis on Friday, unchanged from a week ago. On the Osaka Mercantile Exchange, benchmark September rubber futures closed up 0.7 yen at 80.0 yen.

Open interest in Tocom rubber futures, a barometer of the contracts' popularity among investors, was 251,478 lots at the end of last Thursday trade, up from 250,283 lots a week ago.

In the local physical market, benchmark Thai rubber for large-lot end-users was quoted at 83 yen per kg on Friday, against 82 yen a week earlier.