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Rally May Stall For Taiwan Stock Market

The Taiwan stock market has finished higher now in back-to-back sessions, rising almost 90 points or 1.1 percent along the way. The Taiwan Stock Exchange finished just below the 8,060-point plateau, and now investors may be tempted to take profits when the market opens on Friday.

The global forecast for the Asian markets suggests consolidation, reacting to soft economic data from around the world. China's manufacturing sector shrank for a fifth consecutive month in March, Markit Economics said on Thursday. Also, Eurozone private sector activity fell more sharply than expected in March. The European and U.S. markets finished lower, and the Asian markets are expected to open in similar fashion.

The TSE finished sharply higher on Thursday following gains from the finance, technology, plastic, cement, textile, paper and food sectors.

For the day, the index jumped 74.00 points or 0.97 percent to finish at 8,059.94 after trading between 7,995.57 and 8,075.97 on turnover of 94.50 billion Taiwan dollars. There were 2,748 gainers and 1,427 decliners, with 370 stocks finishing unchanged.

Among the gainers, Pegatron Corp. surged by the 7 percent daily limit, while Hon Hai Precision Industries jumped 2.44 percent, United Microelectronics Corp climbed 2 percent, Chinatrust Financial Holding spiked 2.09 percent and E. Sun Financial Holding collected 2.40 percent.

The lead from Wall Street is negative as stocks declined on Thursday, with renewed concerns about the global economic outlook weighing on the markets - sparked by disappointing data from overseas.

HSBC reported that its index of activity in the Chinese manufacturing sector fell to 48.1 in March from 49.6 in February, with a reading below 50 indicating a contraction. With the drop, the index suggested that Chinese factory activity shrank for the fifth consecutive month.

Adding to the negative sentiment, Markit Economics indicated that Eurozone private sector activity fell more sharply than expected in March. Markit Economics said that its composite output index for the Eurozone fell to a three-month low of 48.7 from 49.3 in February.

On the other hand, the U.S. Labor Department reported that initial jobless claims fell to a four-year low of 348,000 from the previous week's revised 353,000. Economists had expected claims to edge up to 352,000 from the 351,000 originally reported for the previous week. With the decrease, claims fell to their lowest level since 347,000 in the week ended March 8, 2008.

Also, a report from the Conference Board showed that its index of leading U.S. economic indicators rose by more than expected in February, pointing to a more positive outlook for U.S. economic activity in the first half of 2012.

Among individual stocks, shares of FedEx (FDX) came under pressure even though the delivery giant reported better than expected adjusted third quarter earnings and provided upbeat full-year guidance. FedEx fell by 3.5 percent amid the concerns about demand in China.

The major averages ended the session off their worst levels of the day but still closed firmly in the red. The Dow fell 78.48 points or 0.6 percent to finish at 13,046.14, while the NASDAQ slipped 12.00 points or 0.4 percent to end at 3,063.32 and the S&P 500 dropped 10.11 points or 0.7 percent to 1,392.78.

In economic news, Taiwan is on Friday scheduled to release February figures for commercial sales and industrial output. Commercial sales are expected to rise 4.63 percent on year following the 7.21 percent annual contraction in January. Output is called higher by 9.04 percent on year after plummeting 16.46 percent in the previous month.

Also, Taiwan's central bank on Thursday decided to keep its interest rates unchanged as inflationary pressures continued to subside - in line with expectations. The Central Bank of the Republic of China (Taiwan) left the rediscount rate on 10-day loans to banks unchanged at 1.875 percent. The bank had raised interest rates regularly until the quarter ending September 2011. The secured loan rate will remain at 2.25 percent and the unsecured loan rate will remain at 4.125 percent, the bank said.

Also, Taiwan's jobless rate came in at a seasonally adjusted 4.15 percent in February, down from 4.19 percent in January, the Directorate-General of Budget Accounting and Statistics said on Thursday. The expected rate for February was 4.2 percent. The number of unemployed rose by 7,000 to 470,009 in February. The labor force participation rate was 58.18 percent, down from 58.27 percent in January.

by RTT Staff Writer

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