Stocks closed 0.89 percent lower yesterday after Wall Street's lackluster performance on Friday, dealers said.
They said sentiment was also hit by prospects for slower growth in China after its economy grew "too fast" last year, with any downturn expected to dampen demand for Taiwan products in one of the nation's most important markets.
Data last week showing the Taiwanese economy had slowed down markedly added to the cautious tone.
The weighted index lost 69.53 points at 7,751.79, off a high of 7,838.92 and a low of 7,746.37, on turnover of NT$84.84 billion (US$2.57 billion).
SinoPac Securities (永豐金證券) assistant vice president Alvin Teng (鄧可欣) said local investors were concerned about the outlook for China stocks, concerns which also affected mainland H-shares listed in Hong Kong.
"Investors were cautious about valuations in the China market," Teng said, adding that a weaker Hong Kong "also unnerved investors here."
China officials have said that the country's economy grew too quickly last year at 10.7 percent, beating market expectations.
The government wanted the rate to slow this year.
"Economic development is moving in the expected direction but growth in 2006 was a bit too high and we want it to slow to a reasonable growth rate [this year]," Han Yongwen (韓永文), secretary-general of the National Development and Reform Commission, told a conference.
Han noted that at present, China's investment, consumption and foreign trade were "not in balance."
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