Shares closed down 3.35 percent yesterday in Taipei, skidding lower after a slide on Wall Street last week, dealers said.
A share price tumble in China and moves to slow its booming economy also hit sentiment, dealers said.
The TAIEX closed down 300.31 points at 8,670.61 on turnover of NT$142.87 billion (US$4.42 billion).
Decliners led risers 1,927 to 241, with 188 stocks unchanged.
"World markets will have to look to Wall Street for signs of stability" after sliding US shares set off a global downturn, said a trader who requested anonymity.
He said that the credit crisis in the US, which has spooked investors worldwide, was far from over.
"The US ... started the whole mess and only the US can prove an effective source of consolidation going forward," he added.