TW Stock 31 Oct

14:32 31Oct2008 RTRS-Taiwan stocks extend rally led by techs, financials

* Taiwan stocks continue rally for a second day
* Financials up after rule to stem pressure on insurers
* Chip shares rise after report showing semiconductor growth

(Adds quotes, details)
TAIPEI, Oct 31 (Reuters) - Taiwan stocks closed 3.99 percent
higher on Friday, continuing their rally after posting the biggest
single-day percentage rise in eight years Thursday, as investors
bought into shares after government moves to prop up the market.
The main TAIEX share index <.TWII> closed 187.02 points
higher at 4,870.66, after the government implemented a temporary
rule change to ease pressure on insurers from losses incurred in
the global financial crisis [ID:nTP267184].
The surge was further supported by Thursday's decision by the
central bank to cut interest rates by 25 basis points, pushing
the banking and insurance sub-index <.TFNI> up 6.58 percent.
"Warmer cross-strait ties because of Chen Yunlin's (China's
top negotiator on Taiwan issues) visit together with China's bank
representatives is good news for the industry because it allows
for possible growth there," said Parker Wu, an analyst at Shin
Kong Investment Trust.
Turnover hit T$86.8 billion ($2.6 billion), the highest level
for the month.
Leading financial holding companies Cathay Financial
<2882.TW>, Fubon Financial <2881.TW>, Shin Kong Financial
<2888.TW> and Taishin Financial <2887.TW> all closed the day
limit-up.
Chip giants TSMC <2330.TW> and UMC <2303.TW> also both closed
up the daily limit of 7 percent after a report showed
semiconductor sales ticked up in September and after TSMC
reported third-quarter earnings in line with market expectations
[ID:nTP167635].
Taiwan's top electronic parts maker Hon Hai <2317.TW> also
closed 3.9 percent higher ahead of its earnings report for the
current quarter, which it must release by Friday.
LCD makers AU Optronics <2409.TW> and Chi Mei Optoelectronics
<3009.TW>, fighting a bleak industry outlook, struggled for much
of the day, though AU ended up 2.25 percent while Chi Mei
finished down 1.22 percent.
PC vendor Asustek <2357.TW> also bucked the trend, falling
2.16 percent, after it released weaker-than-expected results on
Thursday and offered a cautious outlook for the current quarter.
The broader electronics sub-index <.TELI> rose 3.48 percent.
China's top envoy for Taiwan affairs Chen Yunlin is due to
visit the island next Monday. Analysts failed to agree on the
possible effect of his visit on the stock market.
"We have already seen his visit reflected in the price of
airline and hospitality shares in the past week. This is probably
due to expectations of better business for hotels and airlines,"
said Wu at Shin Kong Investment Trust.
Others, however, were less optimistic.
"If the stock market can climb 500 points after Chen's visit,
he should come every week," said Alan Tseng, an analyst at
Capital Securities.
"The reason why airline shares are climbing again is because
they've fallen by a lot in the past few months and they are
climbing back up to a reasonable level."

HOT STOCKS
-- Shares of Compal Electronics <2324.TW>, the world's second
largest contract PC maker, rose by more than 6 percent after chip
giant Intel announced a large investment in VMAX, a joint venture
between Compal subsidiary Vibo and Tecom Co <2321.TW>. Tecom
shares rose 1.53 percent.
--------------------TAIEX IN PERSPECTIVE--------------------
Move on day x.xx percent
Close on day x,xxx.xx
2008 intraday high 9,309.95
2008 intraday low 4,110.09
All time high 12,682.41 12 FEB 1990
------------------------------------------------------------
For a table of foreign trading in Taiwan stocks, double-click
on [ID:nTP170358]
(Reporting by Kelvin Soh, Editing by Jonathan Hopfner)
((kelvin.soh@thomsonreuters.com; +886 2 2508-0815; Reuters