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Local stock market slightly down after Wall Street drop

TAIPEI, Taiwan -- Shares in Taiwan closed lower Thursday as investors took cues from a fall on Wall Street overnight after the World Bank downgraded its forecast for 2014 global economic growth, dealers said.

Large-cap stocks in the bellwether electronics sector generally trended lower in line with the broader market, while select old economy stocks attracted bargain hunting, which lent some support to the index, the dealers said.

Market sentiment became cautious ahead of a policymaking meeting scheduled by the U.S. Federal Reserve for next week, which could give more clues about the Fed's monetary policy, they added.

The weighted index on the Taiwan Stock Exchange closed down 25.15 points, or 0.27 percent, at 9,204.65, after moving between 9,186.79 and 9,220.89, on turnover of NT$99.59 billion (US$3.32 billion).

Reactions to Wall Street's Downturn

The market opened down 0.21 percent and fell to the day's low in the wake of the losses incurred on Wall Street overnight after the World Bank cut its forecast for 2014 global economic growth to 2.8 percent from 3.2 percent, the dealers said.

Selling focused on high-tech heavyweights, which pushed down the index below the 9,200 point level before bargain hunting emerged to push the broader market back to that level at the close, they said.

"After the local bourse breached 9,200 points (two days previously), many investors have become wary of a possible major pullback and tended to stay on the sidelines," Concord Securities analyst Kerry Huang said, referring to the reduced trading volume.

"Witnessing the Wall Street downturn, they simply cut their holdings in electronics heavyweights to pocket the gains they had built in recent sessions," Huang said.

Electronics Sector

Taiwan Semiconductor Manufacturing Co. (台積電), the most heavily weighted stock in the local market, fell 1.20 percent to close at NT$123.50, while integrated circuit designer MediaTek Inc (聯發科). shed 1.19 percent to end at NT$500.00 after Nomura Securities downgraded its rating on the stock.

Hon Hai Precision Industry Co. (鴻海), which assembles iPhones and iPads for Apple Inc., lost 0.43 percent to close at NT$93.40, while Largan Precision Co., a smartphone camera lens supplier to Apple, ended down 0.96 percent at NT$2,060.00.

Bucking the downtrend on the broader market, United Microelectronics Corp. (聯電) rose 3.79 percent to close at NT$15.05 on hopes that its advanced 28-nanometer process will strengthen the contract chip maker's bottom line and that sales growth momentum will pick up in the second quarter.

Old Economy Sector

In the old economy sector, Wei Chuan Foods Corp. (味全) gained 0.89 percent to close at NT$45.25 and rival Uni-President Enterprises Corp. (統一) added 0.57 percent to end at NT$53.50 amid lingering optimism toward increased beverage sales during the summer.

"The session was quiet and boring, as many investors appeared reluctant to trade for the moment," Huang said. "I think investors are just watching closely to see the outcome of the upcoming Fed meeting."

Huang said it is possible that the slowness will continue the following day.

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