The TAIEX rose above the 6000 level for the first time in more than 11 months.
Formosa Plastic Corp (台塑) led gains after a report said the Formosa Group is planning to sell shares of its North American unit in the US.
The TAIEX advanced 56.69, or 1 percent, to 6007.33, the highest since Feb. 16, 2001. Formosa Plastic was the index's leading gainer, making up more than a tenth of its advance. Four stocks rose for every one that fell.
"The Formosa Group wants to list shares in the US because it foresees a recovery in the petrochemical sector," said Cecilia Liu, an analyst at CLSA Ltd, who has a "buy" recommendation on Formosa Plastic shares.
The total value of shares traded yesterday was NT$150.4 billion (US$4.3 billion), down from Friday's trade of NT$174.4 billion though 75 percent above the six month average of NT$86.1 billion.
The TAIEX has surged 47 percent in three months, making it the world's second-best performing stock market in US dollar terms.
Formosa Plastic rose NT$2.6, or 6.9 percent, to NT$40.1. Formosa Chemicals & Fibre Corp (台灣化纖) gained NT$1.9, or 6.9 percent, to NT$29.30. Nan Ya Plastic Corp (南亞塑膠) added NT$1.4, or 4.7 percent, to NT$31.2.
Some computer-parts makers gained after Compaq Computer Corp said Friday its 2002 sales and profit will exceed analysts' forecasts in part because of increasing demand for data storage and servers.
Asustek Computer Inc (華碩電腦), Taiwan's biggest maker of computer motherboards, advanced NT$1, or 0.6 percent, to NT$173. Hon Hai Precision Industry Co (鴻海精密), which makes everything in a computer except chips, gained NT$4, or 2.2 percent, to NT$187.
Memory chipmakers gained. The price of the 128MB dynamic random access memory chip was unchanged last week, suggesting that demand for the chips remains steady. Mosel Vitelic Inc (茂矽) rose NT$1.3, or 6.7 percent, to NT$20.6. Nanya Technology Corp (南亞科技) added NT$2.3, or 4.9 percent, to NT$48.9. Powerchip Semiconductor Corp (力晶半導體) gained NT$1.8, or 6.1 percent, to NT$31.4. Promos Technologies Inc (茂德科技) gained NT$2.4, or 6.9 percent, to NT$37. Winbond Electronics Corp (華邦電子) rose NT$1.8, or 6.9 percent, to NT$27.9.
Mobile telephone companies fell after the combined bidding by six companies over 10 days for five so-called third-generation mobile-telephone licenses reached NT$41.2 billion (US$1.2 billion) Saturday, exceeding the minimum price by more than a fifth.
Investors may be concerned the companies are paying too much for the licenses and won't be able to make money from them.
Chunghwa Telecom Co (中華-電信), the former phone monopoly, fell NT$0.5, or 1 percent, to NT$51. Far EasTone Telecommunications Co (遠傳電信), Taiwan's No. 4 mobile phone company, shed NT$0.9, or 2 percent, to NT$44.
China Airlines Co (華航) fell NT$0.03, or 2.1 percent, to NT$14. Taiwan's largest carrier suspended three pilots after their plane took off in the wrong direction from Anchorage, Alaska, Agence France-Presse reported, citing Kay Yong (戎凱), managing director of Tai-wan's Aviation Safety Council.
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