Taiwan stocks climb

Taiwan shares ended up 5.26 percent on Monday in their biggest percentage gain in more than three years, led by heavyweights such as TSMC and Cathay Financial, after a surprise Fed rate cut sparked a US market rally.
The main TAIEX shares index, which hit a three-month low in the previous session amid a global sell-off, rose 425.31 points to end at 8,515.60. The rise was the biggest daily gain since May 2004. Despite the gain, the index is still down about 13 percent from a more than seven-year closing high reached on July 24.
The electronics sub-index was up 5.25 percent, after ADRs for most Taiwan semiconductor firms rallied in New York on Friday. The financial sub-index, which had been hardest hit by fears of the US subprime mortgage meltdown, soared 5.51 percent.
Cathay Financial and Shin Kong Financial, parents of Taiwan's top two life insurers, both went 7 percent limit up. "The rate cut came as a pleasant surprise to the market, where selling pressure just did not stop all of last week," said George Hsieh, who manages T$18 billion (US $545 million) for Capital Securities Investment Trust. "Investor confidence has recovered a bit. Still, there are lingering worries over when the subprime crisis will actually end," he said.
Hsieh now has 88 percent of his portfolio in Taiwan shares, slightly lower than last week. China Airlines, Taiwan's top carrier, closed up 1.54 percent as no casualties were reported after one of its planes caught fire at an airport on Japan's southern island of Okinawa.
Trading was sharply slower at T$127.4 billion (US $3.86 billion) from T$178.4 billion in the previous session, indicating investors were reserved about selling, seeing further upside ahead, said Grand Cathay Investment Services chairman Tu Jin-lung. US stocks soared on Friday after Fed's discount rate cut. Taiwan Semiconductor Manufacturing (TSMC) led the rally of Taiwan firms with American Depository Receipts (ADRs) in US trading on Friday.
TSMC, the world's No 1 contract chip maker, jumped 5.42 percent, and smaller rival United Microelectronics Corp was up 4.66 percent. Advanced Semiconductor Engineering, the world's No 1 chip packaging house, rose its daily limit of 7 percent.
First Financial, controlled by the government, rose 2.92 percent. The government-controlled firm does not rule out selling a stake to a foreign investor, but does not want to be acquired by such an investor, the Economic Daily reporting, citing the company chairman.