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The main TAIEX index dropped 1.66 percent or 147.68points to 8,732.59, the biggest percentage slump since the quake in Japan in mid-March.
All but the tourism sector ended lower led by electronics and automobiles , both sinking over 2 percent.
Tourism shares closed up 1.28 percent, buoyed by hopes of big profits when Taiwan allows individual mainland Chinese tourists in from as early as June.
The Taiwan dollar weakened by T$0.137 to T$29.129.
Foreign investors were net buyers on Monday, bringing their total purchase to T$51.7 billion so far this month.