Taiwan shares rose 1.4 percent on Friday to their highest close in six weeks, as investors largely ignored a rate hike by Taiwan's central bank and bought small-cap growth issues such as Taiwan Cement. The main TAIEX ended up 122.25 points at 9,105.28, extending a two-day advance to the highest finish since August 9.
But softer turnover of T$137.74 billion ($4.16 billion) showed the cautious mood ahead of a national holiday early next week. "Steel, cement and paper shares are all doing very well and we are betting that there's still room for them to rise further to reflect higher raw material prices," said Alex Huang, a vice president at Mega International Securities.
Taiwan Cement surged 6.98 percent to its daily limit. China Steel, the island's top steel producer and the market's second-most active issue by turnover, jumped 2 percent, helping to send the steel sub-index 2.2 percent higher.
Their gains outpaced the electronics sector, which edged up 1.5 percent as worries remained over the potential impact from the subprime market woes despite a US interest rate cut. If the gains are sustained, Huang did not rule out the TAIEX rising as high as 9,250 points next week.
Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world's top contract chip maker, which sells most of its products to North America, added 0.8 percent, while DRAM memory chip maker Nanya Technology shed 3.6 percent. A local rate hike hurt sentiment on banking shares.
Shin Kong Financial Holding fell 3.2 percent and rival Cathay Financial Holdings gave up 2.5 percent, pulling the financial sector 1.4 percent lower. Arima Computer slid 4.7 percent after the firm said on Thursday that it was selling its notebook PC and server business to contract manufacturing firm Flextronics. But bigger rival Quanta Computer rose 1.2 percent amid hopes of rising PC demand, helping the computer and peripherals sub-index up 1.8 percent.