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Taiwan Stock Market: Resistance At 7,600

The Taiwan stock market has closed higher now in eight straight trading days, surging almost 520 points or 7.3 percent in that span. The Taiwan Stock Exchange finished just below the 7,600-point plateau, and now analysts are predicting modest selling pressure at the opening of trade on Tuesday.

The global forecast for the Asian markets is soft thanks to disappointing economic data from the United States, as well as ongoing concerns about the looming U.S. fiscal cliff. The Institute for Supply Management said that U.S. manufacturing activity fell to a three-year low in November. And in Washington, lawmakers continue to struggle to reach an agreement to avoid the automatic tax increases and spending cuts currently due to go into effect at the end of the year. The European markets were higher and the U.S. bourses were down, and the Asian markets are expected to follow the latter lead.

The TSE finished slightly higher on Monday as gains from the textile, cement, construction, finance, paper and technology stocks were capped by weakness from the food and plastic sectors.

For the day, the index added 19.74 points or 0.26 percent to finish at 7,599.91 after trading between 7,628.29 and 7,562.19 on turnover of 81.39 billion Taiwan dollars. There were 2,246 gainers and 2,205 decliners, with 616 stocks finishing unchanged.

Among the actives, International Games System, X-Legend Entertainment and Chimei Innolux all surged by the daily maximum of 7 percent, while AU Optronics spiked 5.26 percent.

The lead from Wall Street is negative as stocks moved lower on Monday after failing to sustain an early upward move. The downturn by the markets was partly due to the release of a disappointing report on U.S. manufacturing activity.

The initial strength followed positive manufacturing data out of China, with the data generating optimism about the outlook for the global economy. China Federation of Logistics and Purchasing said that its purchasing managers' index rose to 50.6 in November from 50.2 in October, with a reading above 50 indicating growth in the Chinese manufacturing sector.

Buying interest waned not long after the open, however, as traders continued to express uncertainty about the looming U.S. fiscal cliff.

The subsequent pullback followed a report from the Institute for Supply Management showing an unexpected contraction in U.S. manufacturing activity in November. The ISM's purchasing managers index fell to 49.5 in November from 51.7 in October, with a reading below 50 indicating a contraction in manufacturing activity. The drop pulled the index down to its lowest level in over three years.

Meanwhile, a separate report from the Commerce Department showing a bigger than expected increase in U.S. construction spending in October helped to limit the downside for the markets.

The major U.S. averages were down on Monday as the Dow dipped 59.98 points or 0.5 percent to finish at 12,965.60, while the NASDAQ edged down 8.04 points or 0.3 percent to close at 3,002.20 and the S&P 500 fell 6.72 points or 0.5 percent to end at 1,409.46.

In economic news, the seasonally adjusted purchasing managers' index for Taiwan's manufacturing sector dropped to 47.4 in November from 47.8 in October, Markit Economics and HSBC Bank said on Monday. A PMI reading below 50 indicates contraction in the sector, while one above suggests growth. Operating conditions in the sector had deteriorated in each of the past six months.

New orders received by manufacturing firms decreased notably during the month as demand both at home and abroad remained weak. Reflecting the fall in new orders, manufacturing output decreased further during the month.

by RTTNews Staff Writer

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