TAIEX falls back as dealers keep wary eye on Fed

Share prices closed 0.87 percent lower yesterday as early gains gave way to profit-taking in continued heavy trade ahead of the US central bank meeting on interest rates later in the day, dealers said.

They said that while all markets fully expect another US rate hike of 25 basis points to 5 percent, the key issue is what the US Federal Reserve will have to say about the monetary policy outlook.

The TAIEX fell by 64.23 points to 7,324.71, on turnover of NT$176.24 billion (US$5.6 billion). Decliners led gainers 494 to 371, with 75 stocks unchanged.

The construction sector was up after reports that Nan Shan Life Insurance Co (南山人壽) is set to invest NT$40 billion in the property market this year.

The financial sector was the biggest decliner yesterday, falling 2 percent overall.

Taishin Financial Holding Co (台新金控) fell sharply on growing concerns about the company's full-year earnings, after it said on Tuesday that its loan write-offs would remain high in the second quarter.

Taishin Financial also said that it would stop issuing new cash cards following rising defaults on the nation's cash and credit-card loans since last year.

Contract chipmakers also fell after Merrill Lynch downgraded its rating on United Microelectronics Corp (UMC, 聯電), the world's second-largest contract chipmaker by revenue, to neutral from buy, traders said.

UMC fell 4.7 percent to NT$21.30, while larger rival Taiwan Semiconductor Manufac-turing Co (台積電) dropped 2.2 percent to NT$66.50.