Taiwan stocks fell 0.24 percent to a three-day closing low on Wednesday, weighed by losses in Cosmos Bank and other financial shares after a newspaper said financial regulators would probe the lender. The main TAIEX share index slid 21.53 points to 8,844.22, dragged down by a 1.43 percent slide in the financial sub-index.
The heavily weighted electronics sub-index rose 0.27 percent. Still, the main index has staged a rally of about 20 percent since the year's trough in early March. It hovered at a seven-year closing high this month on heavy buying by foreign investors.
"Banking stocks were under pressure," said Kevin Li, a vice president of Shin Kong Securities Investment Trust which has T$50 billion (US $1.5 billion) in client assets. "This should be a company specific case," Li said, referring to Cosmos Bank.
"The sector's decline would be brief, as most banks are recovering from a consumer credit crisis that peaked in late 2006." Cosmos, 10 percent owned by General Electric's finance arm, slumped by the 7 percent daily limit. Cosmos Bank and regulators were not immediately available to comment on the report.
Taiwan's top financial holding firm Cathay Financial was off 3.21 percent. Foreign investors had net purchases of T$174.5 billion ($5.32 billion) in Taiwan shares so far in June, the biggest monthly record since December 2005.
On a positive note, Taiwan plans to allow pension funds, with an estimated T$170 billion under management, to invest in Taiwan shares around the fourth quarter.
China Steel Corp, Taiwan's top steel maker, rose 0.63 percent after local media reported that the company had revived plans for an alliance with Formosa Plastics Group for the two companies' steel operations.
Cal-Comp Electronics went limit up on media reports that it had received an order for 9 million low-end CDMA handsets from an Indian customer, bringing its orders from the company so far this year to 12 million.
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