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14:32 17Nov09 RTRS-Taiwan stocks fall, financials down after China deal * TAIEX off near-17 month closing high * Financial shares weaken after recent rally * Chi Mei extends gains after Innolux deal (Updates indexes, adds quotes and details) TAIPEI, Nov 17 (Reuters) - Taiwan stocks ended down 0.76 percent on Tuesday as investors sold banking stocks, including Cathay Financial <2882.tw>, that had risen sharply ahead of the implementation of a financial services pact with China. Taiwan signed the much-anticipated agreement with China on Monday, allowing its banks to tap China's massive market and paving the way for banks on both sides to invest in each other. [ID:nTP239088] The main TAIEX share index <.TWII> closed down 59.47 points at 7,733.21, weighed down by a 2.49 percent fall in sub-index of financial companies <.TFNI>. Turnover spiked to a two-week high of T$146 billion ($4.5 billion) from Monday's T$123 billion. "The fall in financial shares was within expectations, with investors pocketing gains before the stocks pull back even further," said Bevan Yeh, said a senior fund manager at Prudential Securities Investment Trust. Cathay Financial, the island's top-listed financial holding firm, dropped 2.46 percent. Chinatrust Financial <2891.tw>, Taiwan's top credit card issuer, dropped 3.33 percent. Financial shares have jumped more than 50 percent so far this year on expectations the MOU will help banks establish a foothold in the Chinese market. The gain lifted the TAIEX up about 70 percent in the same period. Analysts said the MOU was merely a document acknowledging that Taiwan and China could open financial markets to each other, giving no details on whether Taiwan companies would be allowed into the mainland market. Details for Taiwanese and Chinese financial firms investing in each other are due to be discussed in a free trade-style pact, known as the economic cooperation framework agreement (ECFA), which is not expected to be signed until 2010. "The Taiwanese market could lose momentum amid a lack of fresh trading stimulus, as major events that helped uphold the main index's recent gains have already taken place," said Yeh. LCD makers offered support to the broader board, with Chi Mei Optoelectronics <3009.tw> up 6.72 percent. The stock has risen 14 percent in the past two days after it announced a merger with Innolux Display Corp <3481.tw> on Saturday. But analysts warned that LCD shares could be overbought and face selling pressure in the next couple of days. Innolux, the third most-active stock by volume and turnover, dropped 4.96 percent. TSMC <2330.tw> and UMC <2303.tw> helped curb losses, rising 0.32 percent and 0.59 percent, respectively, as they tracked gains by chip giant Intel and the Philadelphia semiconductor index <.SOXX>. The United States, Taiwan's second-largest export market, showed a brisk 1.4 percent rise in October retail sales, raising hopes upbeat consumer sentiment could boost holiday sales. [.N] Taiwan's top PC brand Acer <2353.tw> rose 0.73 percent and Asustek <2357.tw> 1.09 percent, respectively. ---------------------TAIEX IN PERSPECTIVE------------------ Move on day -0.76 pct Close on day 7,733.21 2009 intraday high 7,811.92 2009 intraday low 4,164.19 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 Joan Hsu; Editing by Chris Lewis)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) ASIA-PACIFIC STOCK MARKETS: Pan-Asia......[STXNEWS/AS] Japan........[.T] S.Korea....[.KS] S.E. Asia............[.SO] Hong Kong...[.HK] Taiwan.....[.TW] Australia/NZ.........[.AX] India.......[.BO] China......[.SS] OTHER MARKETS: Wall Street...........[.N] Gold.........[GOL/] Currency..[FRX/] Eurostocks...........[.EU] Oil...........[O/R] JP bonds...[JP/] ADR Report..........[ADR/] LME metals..[MET/L] US bonds...[US/] Stocks News US...[STXNEWS/US] Stocks News
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