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Local market closes down, electronics continues downtrend

TAIPEI--Shares in Taiwan closed lower Tuesday, extending losses from a session earlier, as the bellwether electronics sector continued a downtrend, with investors pocketing recent gains, dealers said.

The weighted index on the Taiwan Stock Exchange closed down 28.30 points, or 0.3 percent, at 9,391.88, after moving between 9,357.32 and 9,483.75, on turnover of NT$132.95 billion (US$4.43 billion).

Market Cautious on Fed

"Market sentiment was cautious today and could remain so in the local market before the U.S. Federal Reserve (Fed) wraps up a two-day policymaking meeting Wednesday," Hua Nan Securities analyst Stan Chang said.

"I expect that the index will continue to move between 9,300 and 9,500 points in the short term," he said.

Taiwan Semiconductor Manufacturing Co. (TSMC,台積電), the most heavily weighted stock in the local market, bucked the downturn and prevented the broader market from falling further at the close, the dealers said.

Old economy stocks, in particular firms with close business ties to China, also lent support to the index as investors took hints from gains posted by the equity markets in Shanghai and Shenzhen to buy, they added.

The market opened up 0.40 percent and rose to the day's high on a technical rebound, but as the index moved closer to the nearest technical resistance of around 9,500 points, selling emerged to drag the index into the red, the dealers said.

Selling continued with the high-tech sector in focus, but TSMC shares appeared resilient, helping the broader market offset the impact from the technical barriers to some extent, they said.

TSMC, the world's largest contract chip maker, rose 2.06 percent to close at NT$124.00 with 38.07 million shares changing hands, while rival United Microelectronics Corp. (UMC, 聯華電子) lost 1.35 percent to end at NT$14.65.

TSMC Stages Rebound

"After consolidating in the past few sessions, TSMC appeared attractive to some bargain hunters," Hua Nan Securities analyst Stan Chang said. Before Tuesday's gains, TSMC shares had fallen 2.8 percent in the previous two sessions.

"In addition, I suspect that the buying in TSMC shares partly came from government-led funds in a bid to stabilize the local market," Chang said. "Due to the large trading volume of TSMC, turnover on the broader market expanded today."

Among the falling electronics stocks, flat panel maker Innolux Corp. (群創光電) fell 6.6 percent to close at NT$14.15, although the company reported a jump in its second-quarter earnings a day earlier.

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