Taiwan stocks closed flat on Tuesday, taking a break after climbing to a 4-month high, as investors pocketed gains from bank shares like Cathy Financial Holding that had been boosted by a recent rate hike.
The main TAIEX share index was trapped in a tight range, ending up 0.05 percent at 6,081.01 and barely extending on Monday's 2.23 percent rally. The index has risen about 16 percent since the year's trough in August.
But turnover fell to T$96.92 billion after spiking to a 5-month high of T$147.35 billion on Monday as cautious investors were reluctant to chase stocks after recent run-ups.
"Financial shares had risen a lot recently so they encountered selling pressure, but we saw some money flowing to tech and industrial stocks for bargain hunting," said Maggie Chine, consultant of Capital Investment Management.
Financials, which have the second heaviest weighting on the index after bellwether electronics, inched down 0.01 percent after surging 5.5 percent over the previous two sessions.
Shares in Cathy Financial Holding dropped 1.49 percent to T$66.00 after rising 4.7 percent over the previous two sessions, buoyed by the rate hike.
Investors are betting that rising interest rates will allow banks to widen the rate spread between loans and deposits, while insurance companies are seen gaining from higher fixed-income investments.
Chang Haw Bank rose 0.97 percent to finish at T$20.80 after the bank's chairman told Reuters in the day that the bank is planning on completing an overseas sale of 1.4 billion new shares in the first quarter of 2005.
Among other major winners, display screen maker AU Optronics rose 0.92 percent to T$43.90 and microchip designer VIA Tech gained 2.73 percent to T$22.60.
The gains came after the US Dow Jones closed 0.23 percent higher and the Nasdaq rose 0.53 percent on Monday due to a solid corporate sales outlook and easing oil prices.
The over-the-counter market's TAISDAQ index rose 0.17 percent to close at 117.41 and October TAIEX index futures gained 0.29 percent to 6,123.