MUMBAI, Dec 10 (Reuters) - Indian natural rubber futures are likely to edge higher this week on bargain hunting, driven by an upside in overseas markets and as demand from tyre makers improved in local spot markets.
Key Tokyo rubber futures edged higher early on Monday after weekend data showed a pick-up in China's factory output and retail sales, but uncertainty about budget wrangling in the United States kept a lid on gains.
The key January rubber contract on India's National Multi Commodity Exchange was up 0.9 percent at 16,625 rupees per 100 kg at 0731 GMT.
The spot price of the most-traded RSS-4 rubber (ribbed, smoked sheet) at the Kochi market in top-producing Kerala state rose by 200 rupees to 16,180 rupees per 100 kg.
Spot price has fallen more than 7 percent in the past one month, luring tyre makers to build inventory for lean supply season.
Rubber production in India peaks during the October-January period and starts falling from February.
"The difference between local and overseas price has come down. At current prices, there is no incentive for importers. Tyre companies are raising purchases in local market," said a dealer based at Kochi market in southern Kerala state.
In Malaysia spot price was 15,456 rupees per 100 kg on Monday.
India's natural rubber imports more than doubled in October from last year's level to 18,326 tonnes as tyre-makers took advantage of lower prices overseas than in domestic markets, the state-run Rubber Board said.
Supplies in local market were moderate as sharp fall in prices was prompting some farmers to hold back supplies.
India is likely to produce 942,000 tonnes of natural rubber in the current year, up from 899,400 tonnes a year earlier. (Reporting by Rajendra Jadhav; Editing by Anand Basu)