Taiwan stocks plunge as microchips track US fall

Taiwan stocks closed lower on Monday, taking a breather after a three-week rally as microchip shares like TSMC fell with their US peers.
Facing heavy resistance at around 6,800-7,000 points, the main TAIEX index opened higher but ended the day down 0.57 percent at 6,779.18, after gaining 11.2 percent over the past three weeks.
"The recent rally should have taken into account most of the anticipations for improving first-quarter corporate profits," said Michael On, managing director at Beyond Asset Management, which has some US $60 million under management.
"The index might pull back to test support at around 6,500 in the near term," he said.
Other analysts said if major technology companies unveil better-than-expected quarterly results, the market can still test the 7,000 point level in the near run.
Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract microchip maker, fell 2.46 percent to T$59.50, tracking a 1.76 percent dip in the Philadelphia semiconductor index on Friday.
Rival United Microelectronics Corp fell 2.17 percent to T$31.50, pushing the electronics sub-index 0.64 percent lower.
But AU Optronics, the world's third largest display screen maker, defied the downtrend and rose 0.64 percent to T$78.50 on strong demand for computer monitors and flat-screen televisions.
Smaller rival Chi Mei Optoelectronics gained 1.92 percent to T$79.50. Both screen makers had risen the daily maximum in Friday's session.
Cathay Financial Holdings, Taiwan's largest financial group, also rose on earnings optimism and ended 0.81 percent higher at T$62.50.
Financial shares generally lent support to the market in early trade, with the financial sub-index up more than one percent at one point on hopes a bank rescue fund may be approved by parliament soon.
But the index lost steam in late trade and ended down 0.25 percent. Mega Financial, the island's second-largest listed financial group, fell 1.3 percent to T$22.80.
The Dow Jones index rose 0.52 percent on Friday after comments from a top Federal Reserve official eased fears of an early interest rate hike, but the tech-heavy Nasdaq fell 0.32 percent after disappointing news from International Business Machines.
Turnover fell to T$169.3 billion from Friday's T$185 billion on caution over near-term outlook.
The over-the-counter TAISDAQ index lost 0.38 percent to 158.30, while April TAIEX index futures dropped 0.28 percent to 6,809.