Taiwan stocks gave up early gains to close 0.55 percent down on Thursday, dragged lower by tech shares such as TSMC on worries that high oil prices and inflation could hurt consumer spending on technology goods.
The main TAIEX share index got a boost from gains on Wall Street and positive comments from investment guru Jim Rogers in early trade. But the index changed direction by midday as cautious investors left the market due to inflation fears.
The TAIEX ended down 43.26 points at 7,811.80, following a 1.5 percent rise on Wednesday. The TAIEX has fallen 16 percent from the year's highest level hit on May 20. Turnover was moderate at T$95.08 billion ($3.13 billion) ahead of a quarterly interest rate decision from Taiwan's central bank later on Thursday.
Shares of Taiwan Semiconductor Manufacturing Co (TSMC), the world's biggest contract chip maker, fell 1.81 percent, and shares of smaller rival United Microelectronics Corp (UMC) fell 1.18 percent.
The semiconductor subindex fell 0.6 percent and the electronics subindex fell 0.81 percent. "The TAIEX will go down further, since the market will hit bottom in the third quarter," said Michael On, Beyond Asset Management's managing director.
Investment author Jim Rogers said he was not worried about the recent correction in Taiwan's stock market and would continue to invest in Taiwan and China on a longer-term basis, the Commercial Times reported on Thursday.
Laptop PC maker Inventec rose 0.55 percent after a local newspaper report that the company will expand and build software R&D centres in north, central and south Taiwan, with plans to add 2,250 employees by 2010.
Chunghwa Telecom fell 1.05 percent even after Citigroup upgraded the stock to "buy" from "hold" on Wednesday due to a surplus cash return to shareholders to boost returns on equity.