Some traders said the market would receive more blows from the Russian crisis, which has brought down world commodities prices.

But some saw a slightly firm tone for the market over recent torrential rains, which may reduce rubber output. Weather experts have said that La Nina, a weather phenomenon which followed the El Nino episode that seared much of Asia with drought last year, has arrived in Asia and will cause heavy rainfall for much of the rest of 1998.

"If the rains continue, rubber output will be affected. We have to see the rain situation, especially in Thailand, in coming weeks," said one Singapore-based trader. "This is probably the only bullish news for the market," the trader said. But he saw limited help if there was an output reduction as there were still no signs of a recovery in demand.

Traders in Thailand, theworld's biggest rubber producer and exporter, said the uncertainty of the Japanese yen and Russia's financial woes were the main concerns. "I think the price will hang on the currency exchange of the baht and yen," said one trader from one major trading house in Thailand's southern Hat Yai.

There was talk that the International Natural Rubber Organisation (INRO) was running out of funds and started to offer RSS3 rubber, said one trader from Trang province. INRO, which groups major producers and consumers, bought about 20,000 tonnes of rubber from Malaysia, Indonesia and Thailand earlier this month in its first buying intervention since December 1993.

The market-stabilising buying by INRO failed to lift saggy rubber prices. However, according to an INRO document obtained by Reuters in Bangkok, INRO also sought to offer various grades of September/October shipment earlier this month.

In Malaysia, traders expected prices to move narrowly this week, but they said the near-term trend could be firm onexpectations of a supply shortfall due to the approaching rains.

A trader at a Malaysian plantation firm said weather was the main factor for the market and he expected prices to move in tight ranges on a lack of inquiries.

"The market is closely watching weather conditions rather than anything else," the trader said. "Rainfalls are seen in the morning as well as in the afternoon. This could hit output and supply would get tighter and tighter from August onwards," he said.

Consumers from both Europe and Asia stayed on the sidelines despite low prices due to a slump in the car industry and Russia's crisis further dampening sentiment, traders said. Malaysian traders said they did not expect much impact from currencies movement on the market which already lacked liquidity.

Trade in Indonesia, the other main Asian rubber producer, was also bearish. "The market has acknowledged that INRO will not enter the market again, but frankly speaking I don't think INRO is capable of stabilising prices due to a lackof funds," said one Jakarta-based trader.

He said the market was extremely quiet last week and was not expected to improve. At the end of last week, Thai RSS3 rubber for December delivery was quoted at around 64 US cents a kg. January 1999 shipment was quoted at 65.50 cents.

Malaysia's benchmark, September International Ones RSS buyer ended at 263 Malaysian cents (62.6 US cents) a kg and September SMR 20 buyer was at 236.50.

Prices for October shipment were quoted at 25.00 US cents/lb fob Medan, Surabaya and Palembang. In Padang, the price was quoted at 25.00 and in Pontianak and Padang at 24.75.