Shares suffer sharp fall over fears of increase in US rates

Share prices closed 2.34 percent lower yesterday, falling sharply after a jump in US wholesale inflation figures sparked concerns that US interest rates will move higher still, dealers said.

They said the data clearly spooked investors, who were already nervous given concerns about a possible outbreak of bird flu and a continuing stalemate between the government and the opposition in the run-up to elections in early December.

Futures-related selling ahead of the settlement of October futures added to the pressure.

The TAIEX was down 136.63 points at 5,694.16, on turnover of NT$72.65 billion (US$2.16 billion).

"Today's sell-off came on the eve of the settlement of October futures," said First Taisec Securities fund manager Lee Chien-wei, adding that this pressure could continue in early trade today.

Declines were across the board as foreign investors unloaded their shares, weakening the NT dollar in turn.

"There is nothing strange about foreign investors selling down their holdings in technology bellwethers amid a general exit from the region ... These [stocks] account for the bulk of their portfolios and enjoy the best liquidity ... so they are easiest to dispose of," Lee said.

Taiwan Semiconductor Manu-facturing Co (台積電) lost NT$0.95 to NT$49.55 despite a report that the world's largest wafer foundry is expected to win contracts from Qualcomm Inc.

United Microelectronics Corp (聯電) was down NT$0.80 at NT$19.05. Among the flat-screen makers, Chi Mei Optoelectronics Corp (奇美電子) was limit-down NT$2.30 at NT$30.70 and AU Optronics Corp (友達光電) NT$0.95 lower at NT$36.05.