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Local stock market drops slightly after Chinese equity rebound

TAIPEI -- Shares in Taiwan closed down slightly Friday as a rebound in the equity markets in China offset the impact from losses incurred on Wall Street overnight, dealers said.

The local bourse moved in a narrow range throughout the session as large-cap stocks such as Taiwan Semiconductor Manufacturing Co. (TSMC,台積電) and Hon Hai (鴻海) Precision Industry Co. remained slow due to stiff technical resistance ahead of 9,200 points, the dealers said.

The weighted index on the Taiwan Stock Exchange was down 8.26 points, or 0.08 percent, at 9,196.39, after moving between 9,171.51 and 9,207.74, on turnover of NT$90.995 billion (US$3.03 billion).

The market opened down 0.13 percent and fell to the day's low in the wake of the decline on Wall Street overnight caused by lower-than-expected retail sales data for May in Washington and rising political tension in Iraq, the dealers said.

Bargain Hunting Emerged

Bargain hunting emerged, helping the broader market recoup part of its earlier losses as investors here were encouraged by momentum in China to buy in the afternoon session, they said.

“The local market was still in consolidation mode as technical hurdles ahead of the range between 9,200 points and 9,300 points remained strong,” KGI Securities analyst Phil Chu said.

“Many investors simply seized on the Wall Street losses to sell before the gains posted on the Shenzhen and Shanghai markets reduced the downward pressure. But, generally speaking, it was a quiet session,” Chu said.

Chu said the index still was able to maintain itself above the 9,100-point mark at the close as many investors still had high hopes that the local market will continue to rise over the longer term after the current consolidation.

Electronics Shares in the Doldrums

However, heavyweights in the bellwether electronics sector remained in the doldrums to keep the broader market in range trade as turnover was moderate, the dealers said.

TSMC, the most heavily weighted stock in the local market, fell 0.40 percent to close at NT$123.00, while Hon Hai Precision Industry Co., which assembles iPhones and iPads for Apple Inc., lost 0.21 percent to NT$93.20.

Smartphone camera lens supplier Largan Precision Co. (大立光) dropped 0.49 percent to close at NT$2,050.00, while integrated circuit designer MediaTek Inc. (聯發科) ended unchanged at NT$500.00.

Bucking the downtrend on the broader market, contract notebook computer maker Inventec Corp. (英業達) gained 2.89 percent to close at NT$28.50 after the company gave an upbeat assessment about its solar energy operations. The stock could continue to move higher before coming closer to the nearest technical resistance level of NT$30.8-NT$31, the dealers said.

Non-high Tech Sector

In the non-high tech sector, Taiwan Cement Corp. (台泥) fell 1.32 percent to close at NT$44.85 and Wei Chuan Foods Corp. (味全) lost 0.33 percent to end at NT$45.10, while Fubon Financial Holding Co. (富邦金) closed down 0.69 percent at NT$43.00.

“Futures contracts for May are scheduled to be settled next week. I am afraid that the settlement will create volatility in the spot market,” Chu said.

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