Shares closed 0.58 percent higher yesterday, extending recent gains on follow-through interest from foreign investors, dealers said.
The TAIEX closed up 42.67 points at 7,427.36, on turnover of NT$103.89 billion (US$3.17 billion). Risers led decliners 706 to 437, with 222 stocks unchanged.
For the week to yesterday, the weighted index closed up 167.82 points or 2.31 percent after a 1.19 percent gain a week earlier.
Average daily turnover stood at NT$107.26 billion, up from NT$103.48 billion the previous week.
"The market has apparently taken its lead from the avid interest shown by foreign investors lately," SinoPac Securities Co (永豐金證券) assistant vice president Alvin Teng (鄧可欣) said.
Dealers said that stronger-than-expected economic growth data for the third quarter to September also contributed to the bullish trading undertone.
GDP rose 5.02 percent year-on-year in the third quarter, compares with the previous official growth estimate of 4.39 percent.
Sentiment was consolidating for a further push upside as traders believe the market could breach its May high of 7,476 points given a current flow of capital into this part of the world, he said.
"I think we are going to have some sort of a liquidity-driven rally, with the pace likely to hasten and slow down alternately, between Thanksgiving and the Lunar New Year, which falls in February 2007," Teng said.
Against the gains on broader market, Taiwan Semiconductor Manufacturing Co (台積電) lost NT$0.10 to NT$63.40, while United Microelectronics Corp (聯電) rose NT$0.70 to NT$19.90.