Share prices closed 0.57 percent lower yesterday over fresh political concerns after President Chen Shui-bian's (陳水扁) wife, Wu Shu-jen (吳淑珍), was indicted on corruption charges, dealers said.
The market managed to come off its losses as bargain-hunters emerged from the sidelines while others hoped for support from government-related funds in the coming sessions, they said.
The weighted index lost 41.17 points at 7,120.44, after trading between 7,036.89 and 7,160.66, on turnover of NT$90.72 billion (US$2.75 billion).
There was speculation that government-related funds had provided some buying support to the stock market to fuel a mild intraday rebound.
Dealers were divided over whether there was a basis for such speculation.
"Bargain-hunting must have played a bigger role than support from government-related funds, if any, in the recovery from the opening slide," said Oliver Fang, assistant vice president at Yuanta Core Pacific Securities (元大京華證券).
The market behaved the way it did as some investors must have placed bets only on the prospect of immediate gains against an uncertain outlook for the medium term, he said.
"Too many `ifs' lie ahead in the political arena, and the market is also set to remain influenced by the subsequent showings of international bourses, [depending on the performance] of the US economy and interest rate changes."
Meanwhile, the New Taiwan dollar weakened against the US dollar on the Taipei Foreign Exchange yesterday, declining NT$0.030 to close at NT$32.950 on turnover of US$706 million.