Taiwan stocks close at two-month high, DRAM falls

TAIPEI, March 6 - Taiwan stocks rose 0.35 percent on Friday to a two-month closing high, as tech shares such as TSMC jumped on rising China demand, but DRAM stocks fell after news of the government's restructuring plans.

The main TAIEX share index ended up 16.43 points at 4,653.63, marking its strongest close since Jan. 7, and has gained 5.1 percent after rising for four straight sessions.

Turnover was light at T$84.6 billion ($2.4 billion), much lower than Thursday's T$106.8 billion.

"China's subsidies in home electronics purchases in rural areas boosted tech shares like TSMC and Chi Mei, helping the market buck Wall Street losses," said Andrew Deng, a vice president of Taiwan International Securities.

The electronics sub-index rose 1.48 percent, with shares of TSMC and LCD maker Chi Mei both jumping more than 4 percent.

Shares of Taiwan Semiconductor Manufacturing Co , the world's top contract chip maker, were further propped up after Deutsche Bank raised its 2009 earnings per share forecast and target price on the chip maker to T$55 from T$48.

Its rise helped boost the semiconductor sub-index by 2.52 percent.

The world's No.3 PC vendor, Acer, fell 0.42 percent, surrendering early gains as investor locked in profits.

A newspaper reported on Friday Acer was the only Taiwan PC firm to win the bidding for low-cost PC projects that China is implementing as part of an effort to boost its economy.

However, DRAM shares dropped as some analysts said the government was not quick enough to come out with a plan to support the sector.

"There's still a long way ahead to save the DRAM sector. There's also doubt about what Taiwan can offer in exchange for technology from foreign rivals," said Michael On, a managing director of Beyond Asset Management.

On expected the market to trade between 4,500 and 4,700 points next week.

Taiwan said on Thursday it would set up a new company in six months to pull together its DRAM makers and bring in technology from Japan's Elpida or U.S.-based Micron to overhaul the sector.

Powerchip, the island's top DRAM maker, dropped its 7 percent daily limit, while smaller rivals Nanya Technology and ProMOS dropped 5.78 percent and 1.63 percent, respectively.

Another top laggard was the financial sub-index, which dropped 1.5 percent as losses in U.S. bank stocks sparked investor worries over the health of world financial system.

Cathay Financial, the island's top listed financial holding firm, slid 2.5 percent.