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Local market plunges below 9,200-point mark

TAIPEI--Shares in Taiwan took a heavy beating Tuesday to push the index below 9,200 points at the close due to concern over the impact on the local petrochemical industry of last week's Kaohsiung explosions, dealers said.

The weighted index on the Taiwan Stock Exchange ended down 188.75 points or 2.02 percent at the day's low of 9,141.44, off an early high of 9,316.82, on turnover of NT$107.08 billion (US$3.57 billion).

9,000-point Support Tested

"After today's steep fall, the local market has become technically fragile," Hua Nan Securities analyst Stan Chang said. "Investors should pay close attention to whether foreign institutional investors will sell more. If so, the index could test 9,000 points shortly."

Chang said investors are also advised to keep a close eye on European debt problems which could continue to affect the global financial markets.

Selling amid such cautious sentiment also spread to the financial sector as many investors feared that the hammered petrochemical sector will cast a shadow over its ability to repay loans extended by local banks, they said.

The bellwether electronics sector also faced heavy downward pressure as many investors locked in the gains they had built in recent sessions, even though the high-tech sector has entered a peak season in the third quarter, they added.

The market opened down 0.15 percent amid lingering worries over the impact from the Kaohsiung explosions, which sent the petrochemical sector into a tailspin. Selling escalated, dragging down stocks across the board, dealers said.

Large-cap high-tech stocks like Taiwan Semiconductor Manufacturing Co. (TSMC,台灣積體電路) and Hon Hai Precision Industry Co. (鴻海精密) were also hit by downward pressure, and along with a weaker financial sector, the broader market fell to the day's low at the close, they said.

"Judging from today's turnover, which was limited despite the dive in the index, I think many investors turned reluctant to take advantage of any bargains after the broader market fell so sharply," Chang said. "Market sentiment appeared very weak."

Petrochemical Sector Down 1.25%

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