Shares closed near seven-year highs yesterday as investors snapped up laggard stocks in active trade, dealers said.
Trading turned aggressive as investors set aside worries over a possible sell-off in Chinese equities as Beijing's move to triple taxes on share transactions at least slowed the market's rise, they said.
The TAIEX closed up 104.95 points, or 1.29 percent, at 8,249.90, its highest level since Aug. 21, 2000, on turnover of NT$129.95 billion (US$3.93 billion).
Risers led decliners 642 to 478, with 228 stocks unchanged.
Dealers said the fall on the market on Thursday may have been overdone given that the rest of the region mostly posted gains.
The central bank's current drive to underpin the local currency should also prove helpful in at least stopping a persistent capital outflow from getting any worse, they said.
The bourse also gained support after investors moved to pick up shares dumped in late trading yesterday when they sold shares of market heavyweights to buy stocks added to the Morgan Stanley Capital International indices.
Foreign institutional investors purchased a net NT$7.133 billion worth of shares yesterday alone, while domestic investment trust companies and proprietary traders bought a net NT$3.194 billion, the Taiwan Stock Exchange said.
For the week to yesterday, the TAIEX closed up 89.93 points, or 1.10 percent, after a 1.57 percent increase a week earlier.
Average daily turnover stood at NT$107.42 billion.
The market is expected to move between 8,140 and 8,300 next week, dealers said.
additional reporting by staff writer