Share prices closed 0.56 percent lower yesterday on concerns over China's plan to enact an anti-secession law which could lay the basis for the use of force against Taiwan if it declares independence, dealers said.
Trade otherwise was subdued as many investors stayed on the sidelines ahead of the New Year.
Dealers said news of an earthquake off the northern tip of Indonesia's Sumatra Island did not appear to have any direct impact overall, but the rubber and tourism sectors got a boost on the view they might benefit.
Taiwan has considerable interests in southeast Asia but as yet it is unclear how those may be affected by the earthquake, if at all. In the longer term, the economic bill could be quite high for the region.
The TAIEX closed 33.48 points down at 5,985.94, on turnover of NT$37.75 billion (US$1.17 billion).
Decliners led gainers 503 to 220, with 134 stocks unchanged.
"There were hopes ... that tourists will stay in Taiwan for the Lunar New Year holidays" rather than travel overseas, said Frank Lin, senior vice president at Fubon Securities Co (富邦證券).
The financial sector was down 0.77 percent and electronics fell 0.74 percent. The tourism sector was up 3.13 percent and rubber gained 1.21 percent.
Taiwan Semiconductor Manu-facturing Co (
Asustek Computer Inc (