Taiwan stocks rally on Wall St; Cathay Fin, UMC, AU soar

TAIPEI: Taiwan stocks rose 2.6 percent on Wednesday, tracking a rally on Wall Street and regional bourses, with Cathay Financial in the lead after the island's top financial holding firm said it will buy back shares.

Investors showed relief after the US Fed's meeting and the intervention of Taiwan government pension funds in the stock market, some fund managers said.

"You can tell the pension funds have been buying blue chips across the tech, banking and traditional sectors," said Robin Hsu, a fund manager at Capital Securities Investment Trust.

"It remains to be seen if this rally will continue. To what extent the recent turmoil in global stock markets points to the slowdown of the global economy is not clear," said Hsu, adding his firm was buying stocks on Wednesday.

At around 0230 GMT, the main TAIEX index had gained 195.17 points to 7,688.29 points, in a rebound from a 14 percent plunge in the past seven sessions.

Cathay Financial went up by the maximum daily 7 percent limit, sending the banking sub-index up 3.3 percent.

United Microelectronics Corp also surged 6.2 percent, boosting the electronics sub-index by 3.2 percent. The world's No.2 contract chip maker posted a year-on-year decline in July sales.

AU Optronics , the world's No.4 flat panel maker, went limit up, even after the Korea Fair Trade Commission ruled that AU had infringed on its competition law.

The Taiwan dollar stood at T$28.98, up from Tuesday's close of T$29.050.

Foreign investors had their fifth-biggest net selling session on Tuesday, bringing their total selling to T$103.2 billion so far this month.

Copyright Reuters, 2011