Stocks down ahead of possible interest rate increase in US

Share prices closed 2.81 percent lower yesterday, extending losses as sentiment soured over predictions that a possibly sharper-than-expected interest rate hike in the US might occur, as well as weakness in regional markets, dealers said.

They noted that institutional investors were on the sell-side after a series of US officials, including US Federal Reserve Chairman Alan Greenspan, suggested interest rates could rise faster than expected, with forecasts for a "moderate pace" of change dependent on inflation figures.

The TAIEX closed down 160.99 points at 5,574.08, on turnover of NT$66.82 billion (US$1.98 billion).

The benchmark index lost 6.9 percent in the last four sessions. Taiex futures for June delivery shed 3.1 percent to 5,540.

Decliners outnumbered gainers 817 to 49, with 93 stocks unchanged.

No stocks closed limit-up, while 97 stocks were limit-down.

Institutional investors sold large-cap stocks, sending the benchmark index into a sharp fall, said Samson Chueh, an assistant vice president with Fuhwa Securities Co (復華證券).

Hon Hai Precision Industry Co (鴻海精密), Taiwan's biggest electronics company by sales, fell 6.4 percent to NT$116.50.

Powerchip Semiconductor Corp (力晶半導體), which in the first quarter became Taiwan's largest memory chipmaker, fell 5.5 percent to NT$23.90.

Taiwan Semiconductor Manu-facturing Co (台積電), the world's No. 1 supplier of made-to-order semiconductors, closed steady at NT$43.30, while its rival United Microelectronics Corp (聯電) fell 3.7 percent to 23.40.