"The (benchmark contract) topped the key 135-yen level on Monday, but it fell at the close, and this prompted players to take profits today," a Tokyo-based analyst said.
He added that the market would be keeping close watch for any news on wintering in key rubber producing areas. Rubber prices typically turn higher in the spring as production falls, he said.
Wintering normally starts in Thailand, the world's top producer and exporter of rubber, as the end of January, and runs through to April. The wintering dry season is the time of the year when rubber tree leaves fall and latex output declines, on average up to 30 percent. Indonesia and Malaysia are also major rubber producers. In the currency market, the dollar moved within a tight band ahead of a series of financial events that are likely to influence direction.
The dollar was around 103.65/68, compared to 103.66/68 in late US trade on Monday.
In related news, the Japan Automobile Tyre Manufacturers' Association said the amount of rubber used to make tyres in Japan rose 6.3 percent in December from a year to 109,480 tonnes. The amount of tyres used for the full 2004 calendar year was also brisk, rising 3.7 percent year-on-year to about 1.29 million tonnes, association data showed.
Turnover in TOCOM rubber were 10,872 lots, down from Monday's 27,534 lots.
Open interest stood at 41,815 lots as of the end of Monday against 40,433 lots on Friday.