Share prices closed down 1.91 percent yesterday after Wall Street's heavy losses amid concerns about the health of the US financial system, dealers said.
They said the US Federal Reserve's move to rescue investment bank Bear Stearns had renewed fears about the global credit crisis.
The weighted index closed down 155.93 points at 8,005.46, off a high of 8,053.08 and a low of 7,900.80, on turnover of NT$118.22 billion (US$3.81 billion).
On the market 36 stocks closed limit-down and six ended limit-up. Decliners led risers 1,708 to 415, with 199 issues unchanged.
Electronics, Taiwan's bellwether sector, was down 3.08 percent, textiles down 1.38 percent, paper down 1.25 percent and financials down 0.50 percent.
Investors were generally cautious ahead of Saturday's presidential election but tourism, transport, and property-backed shares performed well.
Dealers said they were seen benefitting from expectations of a victory for Chinese Nationalist Party (KMT) candidate Ma Ying-jeou (馬英九).
The tourism sector was up 3.20 percent, transport up 1.57 percent, construction up 1.17 percent and cement up 0.42 percent.
Taiwan International Securities (金鼎證券) analyst Arch Shih (施博元) said some bargain-hunting emerged after stocks fell below the 8,000 points threshold.
Ma's predicted victory, with the prospect of a thaw in relations with China, continued to limit the market's downside, he said.
"We have indeed been more resilient than our neighbors in the region thanks to the China story," Shih said. "But this may not last long if Wall Street and the others fail to quickly recover."
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