The Weighted Price Index of the Taiwan Stock Exchange rose 181.53 points, or 2 percent, to close at 9369.84 _ the highest since April 14, 2000.

The market has been boosted in recent weeks by a number of government policies, including a real estate transaction tax reduction, ahead of legislative polls next January and the presidential election two months later.

"This is still a healthy market," said KGI Securities' Noreen Niu.

Taiwan Semiconductor Manufacturing gained 2.1 percent to close at New Taiwan dollars 72. MediaTek rose 5.1 percent to NT$622, and Acer was up 4 percent to NT$71.

Cathay Financial Holding rose 6.3 percent at NT$84. Pan Overseas gained 6.8 percent to NT$3.31 on a Commercial Times report that U.S.-based wireless broadband company Clearwire Corp. was considering setting up a joint venture with the Taiwanese firm to invest in WiMAX market in Taiwan.