tw stock 0114

14:55 14Jan2009 RTRS-Taiwan stocks fall, but DRAM, banking shares up

* DRAM, LCD makers rally on rising product prices
* TSMC sinks, UMC down after Macquarie cuts target price
* Banking shares rise on financial regulator's comments
(Adds quotes and details)
By Gina Chang
TAIPEI, Jan 14 (Reuters) - Taiwan stocks edged down 0.24
percent on Wednesday, reversing earlier gains as investors
remained cautious, but DRAM shares including Powerchip <5346.TWO>
rose as product prices showed signs of stabilising.
Financial shares also outperformed the broader market after
Taiwan's top financial regulator said he was not opposed to
hostile takeovers in the banking sector as long everything was
legal.
The main TAIEX share index <.TWII> ended down 10.89 points at
4,521.47, reversing a one-week intraday high hit early in the
session and a 1.76 percent gain the previous day.
Turnover was light at T$60.8 billion ($1.8 billion), but
higher than Tuesday's T$49.7 billion.
Powerchip, Taiwan's largest DRAM chipmaker, gained 3.82
percent and smaller rival Nanya Tech <2408.TW> jumped by its
daily 7 percent limit.
Prices of standard DRAM memory chips used in personal
computers are showing signs of stabilising after almost two years
of declines thanks to capacity cuts by manufacturers, research
firm DRAMeXchange said late on Tuesday. [ID:nLD371237]
"We're seeing signs of recovery in these sectors, but
investors are still cautious about the overall economy," said
Michael On, managing director of Beyond Asset Management.
"I believe DRAM makers bottomed out after their South Korean
rivals stopped cutting product prices."
Major technology firms such as TSMC <2330.TW> and AU
<2409.TW> are set to announce fourth-quarter earnings next week,
with the market expecting the figures to be gloomy.
LCD product prices are also rising as the sector slashes
production and receives last-minute new orders, but analysts are
divided over whether the hikes are sustainable, a local newspaper
said on Wednesday.
AU Optronics Corp , the world's No. 3 LCD maker,
advanced 2.04 percent even after saying it planned to trim its
global workforce by less than 2 percent this year. [ID:nTP172001]
AU's smaller rival, Chi Mei <3009.TW>, fell 1.41 percent. The
electronics sub-index <.TELI> was down 0.48 percent.
Taiwan Semiconductor Manufacturing Co (TSMC) , the
world's top contract chip maker, lost 1.83 percent. Its shares
jumped 5 percent in the previous session after Citigroup said in
a research note it expected a rising factory utilisation rate for
TSMC.
United Macroelectronics Corp (UMC) <2303.TW> , TSMC's
crosstown rival, fell 0.51 percent after Macquarie cut its
earnings forecast and target price for the company due to lower
production in 2009 amid weak global demand. [ID:nTP131202]
The financial sub-index <.TFNI> gained 0.93 percent following
the regulator's takeover comment. Cathay Financial <2882.TW>, the
island's top listed financial holding firm, was up 0.14 percent
and Taishin Financial <2887.TW> ended limit up.
"I remain neutral on the regulator's comment," said Eddy
Chen, a vice president of National Investment Trust.
"The law of the jungle applies everywhere. I think we'll see
consolidation in the banking and other industries through next
year as smaller businesses could fail to survive the current
downturn."
Taiwan Cooperative Bank <5854.TW> ended up 0.97 percent after
saying on Tuesday it would form a T$2