Taiwan stocks closed higher on Tuesday after soaring on the previous session, buoyed by cyclical and financial issues like Changhwa Bank on better earnings prospects as political uncertainties eased.
The benchmark TAIEX ended up 0.32 percent at 6,494.71, extending Monday's 5.6 percent surge that helped reclaim more than half of the 10 percent lost last week following the disputed presidential election.
Turnover rose to T$144.01 billion from T$112.43 billion on Monday, reflecting growing confidence among investors.
"Since political worries abated, the market's focus was shifting to corporate fundamentals," said Tao Chih-wei, deputy manager of institutional investor division at Fubon Securities.
The financial sub-index gained 0.80 percent as Changhwa Bank shares rose 4.1 percent to T$20.30 and the paper sector jumped 2.32 percent as global demand grows.
Defeated presidential candidate Lien Chan filed a lawsuit on Monday to contest the narrow election victory of incumbent Chen Shui-bian, paving the way for a full recount that could ease Taiwan's political crisis.
Kindom Construction shares surged the daily seven percent maximum to T$12.40 and BES Engineering shares finished limit-up at T$6.75, leading the construction sector 5.64 percent higher.
The bellwether tech sector gave up early gains to end down 0.22 percent on profit-taking, while display screen makers defied the sector's weakness on hopes that higher screen prices and rising demand would boost their first-quarter earnings.
Changhwa Picture Tubes jumped to its daily limit at T$20.30 and rival Quanta Display went limit-up to T$25.00. The two stocks were the market's two most active issues.
Taiwan broke off diplomatic ties with the small Caribbean island of Dominica on Tuesday, losing another of its small band of allies to arch-foe China, which analysts said has no major impact on the market.
The over-the-counter TAISDAQ index jumped 2.13 percent to 145.00, while April TAIEX index futures rose 0.25 percent to 6,487.