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Local market ends flat in consolidation mode

TAIPEI, Taiwan -- Shares in Taiwan closed little changed Wednesday after moving in a narrow range on reduced turnover in reflection of a lackluster Wall Street overnight, dealers said.

Market sentiment turned cautious ahead of a policymaking meeting scheduled by the European Central Bank (ECB) for the following day, prompting many investors here to stay on the sidelines, the dealers said.

The bellwether electronics sector saw mild buying, with select Apple concept stocks in focus, lending support to the broader market, while profit taking took place in the financial sector and the traditional industry sector, which kept the index in negative territory at the close, they added.

Smartphone vendor HTC Corp. (宏達電) fell more than 4 percent, underperforming the broader market, after the company reported worse-than-expected sales data for May, they said.

The weighted index on the Taiwan Stock Exchange ended down 3.50 points, or 0.03 percent, at 9,119.96, after moving between 9,114.18 and 9,140.55, on turnover of NT$97.99 billion (US$3.27 billion).

The market opened up 0.12 percent on follow through buying from a session earlier, but soon fell into consolidation mode for the rest of the session ahead of stiff technical resistance at around 9,200 points, the dealers said.

Waiting for ECB Announcement

“It was a quiet session, as Wall Street gave little indication to investors here. They tended to stay on the sidelines to await the ECB announcement of a decision on its monetary policy,” Mega International Investment Services Corp. (兆豐投顧) analyst Alex Huang said.

“Many analysts at home and abroad anticipate that the ECB will cut interest rates to further boost the economy. Should the ECB fail to meet market expectations, the global equity markets could suffer a disappointment,” Huang said.

With the local bourse fluctuating in ranged trade, the electronics sub-index closed up only 0.35 percent but the gains in the high-tech sector helped the broader market offset the impact of selling among non-high tech stocks, Huang said.

Electronics Stocks

Among the gaining electronics stocks, Taiwan Semiconductor Manufacturing Co. (台積電), the most heavily weighted stock in the local market, rose 0.82 percent to close at NT$123.50.

Hon Hai Precision Industry Co. (鴻海), one of the Apple concept stocks, remained resilient, closing up 0.11 percent at NT$93.10 on hopes that the next generation of the iPhone will boost its shipments.

Largan Precision Co. (大立光), a smartphone camera lens supplier to Apple, added 2.06 percent to end at NT$1,980.00 after rebounding from losses seen a session earlier.

However, HTC fell 4.33 percent to end at NT$143.50 as investors were disappointed with the smartphone vendor's sales data for May. “HTC's May sales data was poor, prompting many investors to have doubts about whether the company will achieve its second-quarter sales guidance amid escalating competition in the market,” Huang said.

Financial Sector

In the financial sector, Cathay Financial Holding Co. (國泰金) fell 0.98 percent to close at NT$45.70 and E. Sun Financial Holding Co. (玉山金) shed 1.28 percent to end at NT$19.25, while Mega Financial Holding Co. (兆豐金) closed unchanged at NT$24.80.

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