The dollar dropped to a low of 132.95 yen, then rebounded to as high as 134.65 yen on Friday morning in Tokyo, ahead of the weekend meeting between Japanese finance minister Kiichi Miyazawa and US treasury secretary Robert Rubin.

In line with the dollar/yen movements, benchmark February rubber futures on the Tokyo Commodity Exchange (Tocom) slipped through a near-term support at 97.2 yen per kg to a low of 96.0 yen in Friday morning trade.

"The yen's recent rise against the dollar was so rapid that operators with longs rushed to unwind their positions this morning," one brokerage analyst said. "The benchmark contract is set to test key support at 95 yen next week if the yen maintains upward momentum."

Another factor that weighed on the rubber futures market was weaker stockprices in Japan and overseas, which were reinforcing concerns about the world economy and global demand for rubber and other commodities, he said.

The benchmark Nikkei stock average fell 163.04 points to 14,098.20 by Friday midday on concerns that sluggish domestic and overseas economies would weigh on corporate profits.

As for fundamentals, the La Nina weather phenomenon was expected to cause heavy rainfall for much of the rest of 1998 and to hurt rubber output in Southeast Asia.

But most operators thought possible reduction in rubber output could do little to improve fundamentals amid a lingering economic slump in Japan and other parts of Asia, analysts said.

In industry news, the Japan Automobile Tyre Manufacturers' Association announced on Friday that Japanese rubber output for tyres was 96,706 tonnes in July, down 1.1 per cent from a year earlier, but up 2.2 per cent from June.

Crude rubber stocks at Japanese private warehouses stood at 31,302 tonnes as of August 20, up from 30,212 tonnes as ofAugust 10, the latest data released by the Rubber Trade Association of Japan showed.

Open interest of Tocom rubber futures, a barometer of the contracts' popularity among investors, was 246,737 lots at the end of Thursday trade, down from 252,803 lots a week ago.

On the Osaka Mercantile Exchange, benchmark February rubber futures were down 1.1 yen per kg at 96.5 yen at Friday midday.

Thai rubber was offered to Japan at 66.00 US cents per kg on an FOB basis on Friday, against 66.50 cents a week earlier.

In the local physical market, benchmark Thai rubber for large-lot end-users was quoted at 105 yen per kg on Friday, down from 106 yen a week ago.