Taiwan stocks closed higher on Friday as investors bought into tech firms like Nanya Tech that have better earnings prospects, while falling turnover showed caution before on Saturday's presidential election.
The TAIEX was trapped in a tight range throughout the session, ending up 0.41 percent at 6,815.09, after marking the biggest point gain in 13 months on Thursday that halved the 6.5 percent retreat over the past two weeks.
"While sentiment turned cautious, we still saw buying in select tech firms whose fundamentals are improving this year," said Albert Lin, vice president at Hotung Securities.
On the non-tech side, transportation issues like China Airlines soared on hopes of a Lien Chan victory on Saturday, which is expected to lead to improving economic ties with China, the island's largest export market.
China Air surged the daily seven percent limit to T$25.80 and rival EVA Airways also finished limit-up at T$22.50. Evergreen Marine, the world's third-largest shipper by capacity, rose 1.26 percent to T$40.20.
Turnover dropped to T$162.0 billion from T$174.9 billion in the previous session as President Chen Shui-bian and Nationalist candidate Lien are locked in an increasingly bitter campaign that is too close to call.
Nanya Tech, the island's top memory chipmaker, gained 4.38 percent to T$28.60 and Power-chip jumped 4.5 percent to T$30.2 on recent hikes in chip prices, helping the tech sub-index 0.43 percent higher.
Taiwan Semiconductor Manufacturing Co (TSMC) rose 1.61 percent to T$63.00, even after the world's largest contract chipmaker said its capital spending budget for next year would fall from this year's $2 billion as global industry growth slows.
The financial sub-index fell 0.91 percent as Mega Financial shares dropped 2.19 percent to T$22.30 and First Financial Holding lost 2.71 percent to T$25.10.
The over-the-counter TAISDAQ index rose 0.37 percent to 151.99, while April TAIEX index futures fell 0.22 percent to 6,830.