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Local shares close up on rebound by electronics sector

TAIPEI--Shares in Taiwan closed higher Tuesday as the bellwether electronics sector staged a rebound after high-tech stocks posted gains on markets in the United States overnight, dealers said.

Electronics heavyweights, including contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) and smartphone camera supplier Largan Precision Co. (大立光電), attracted buying, anchoring the uptrend on the broader market, they said.

The cement sector also gained ground on rising expectations of cement makers' profitability after Asia Cement Corp.'s (亞洲水泥) Hong Kong-listed subsidiary released a positive profit alert for the first quarter, they added.

The weighted index on the Taiwan Stock Exchange closed up 59.29 points, or 0.66 percent, at 8,916.71, after moving between 8,889.44 and 8,918.94, on turnover of NT$89.67 billion (US$2.97 billion).

The market opened 0.47 percent higher in the wake of Wall Street's rebound overnight, and momentum continued with electronics stocks leading the charge, dealers said.

The upswing, however, was somewhat blunted by technical resistance after the index breached 8,900 points, they said.

“Today's gains were simply technical in nature as bargain hunters seized Wall Street's gains as a cause to buy,” Mega International Investment Services Corp. analyst Alex Huang said.

“But after breaching the 8,900-point mark, investors turned cautious again amid fears over volatility down the road as Wall Street's earnings reporting season has begun,” Huang said.

High-tech giants in the U.S., such as Intel, Yahoo and IBM, are scheduled to report their first quarter results later in the week, and financial heavyweight Goldman Sachs is also expected to release its earnings this week.

Gains of Large-cap Electronics Stocks Capped

"So investors bought into local large-cap electronics today but their gains were capped," Huang said. The electronics sub-index closed up 1.0 percent.

Among the winning electronics stocks, TSMC, the most heavily weighted stock in the local market, rose 1.66 percent to close at NT$122.50, while Largan gained 2.59 percent to close at NT$1,585.00.

"TSMC is expected to release its first quarter results Thursday. While few investors have doubts about its first quarter numbers, many are still waiting for the company's sales guidance for the second quarter," Huang said.

After the latest gains, TSMC's market capitalization exceeded NT$3.17 trillion, the highest in the company's history.

With buying interest largely concentrated on the electronics sector, old economy stocks finished mixed, dealers said.

The cement sector closed up 0.89 percent, helped by a 1.94 percent rise in Asia Cement Corp. shares to NT$39.40 after subsidiary Asia Cement (China) said it expected to report a first quarter net profit 1,300 percent higher than the 8.5 million Chinese yuan (US$1.37 million) net profit it posted the same period a year earlier.

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