Banks lead rise in TAIEX

The nation's main stock index posted its biggest gain in three weeks, led by China Development Industrial Bank (中華開發工銀), after the central bank cut interest rates for a seventh time since December in an effort to kickstart the economy.

The central bank on Thursday reduced the rediscount rate, charged to commercial lenders for 10-day loans, to 3.5 percent from 3.75 percent.

"Interest rates are higher than they should be at the present stage of the economic cycle in Taiwan," said Han Ong, head of Asia-Pacific strategy at Salomon Smith Barney Hong Kong Ltd. "There's more scope in Taiwan" for further rate reductions.

The TAIEX gained 114.88, or 2.4 percent, to 4,883.43, its biggest one-day gain in percentage terms since June 6. The index still fell 0.4 percent for the week. Within the index, 391 stocks rose and 57 fell. The total value of trade today was NT$48.2 billion, compared to NT$33.4 billion yesterday.

The economy grew 1.1 percent in the first quarter, the slowest in more than 26 years. The key stock index is the worst performing in the world in the last three months, down 20 percent in US dollar terms.

Banks rose on expectations the central bank will reduce rates further this year, in an effort to spur lending and make it easier for companies to repay their debts.

China Development Industrial Bank, the biggest lender in Taiwan by market value, rose NT$0.40, or 1.4 percent, to NT$28.40. Chinatrust Commercial Bank (中國信託商銀), Taiwan's second-biggest bank by market value, rose NT$0.20, or 0.8 percent, to NT$24.10. International Commercial Bank of China (中國國際商銀), the fourth biggest, rose NT$0.30, or 1.4 percent, to NT$21.70. United World Chinese Commercial Bank (世華商銀), the sixth biggest lender, rose NT$0.90, or 4.4 percent, to NT$21.60.

Chipmakers who make semiconductors on a made-to-order basis gained after the Philadelphia Semiconductor Index, a price-weighted index of 16 companies involved in the design, distribution and manufacturing of semiconductors, rose 3.7 percent Thursday.

Taiwan Semiconductor Manufacturing Co (台積電), the biggest make-to-order chipmaker, rose NT$2.50, or 4.1 percent, to NT$64. United Microelectronics Corp (聯電), TSMC's biggest rival, rose NT$1.30, or 2.9 percent, to NT$45.70.

China Steel Corp (中鋼) rose NT$0.70, or 4.2 percent, to NT$17.20, its biggest one-day gain in percentage terms since May 22, on hopes the rate cut Thursday will spur more demand for its products among domestic constructors and manufacturers.

Chunghwa Picture Tubes Ltd (中華映管) rose NT$0.20, or 1.3 percent, to NT$15.50. The maker of computer monitors and liquid crystal display screens will build a liquid crystal display plant in China's Jiangsu province, the DigiTimes Internet site reported, without citing source.

Mitac International Corp (神達) rose NT$1.10, or 5.9 percent, to NT$19.90, the biggest one-day gain in percentage terms since May 24. The company said it will fire 10 percent or 150 of its employees in a move the computer maker said will cut NT$150 million in costs in 2001. It expects its first-half profit to fall 36 percent to NT$15.4 million.

VIA Technologies Inc (威盛) rose NT$1, or 0.4 percent, to NT$238. Taiwan's biggest chip designer said a US technology company, Rauch Medien, will buy Via's C3 processor. VIA didn't say how much the order will be worth to the company.