Taiwan stocks inch to 16-mth closing high; techs slip

* LCDs shares fall after LG Display f'cast lower panel prices

* Banking stocks beat broader market

* Mediatek helped by positive brokerage note

* Analysts say TAIEX to pull back to 7,600 pts next wek

TAIPEI, Oct 16 - Taiwan stocks inched up 0.06 percent on Friday to a 16-month closing high, with gains in financial shares offset by concerns over a weaker fourth quarter for LCD makers such as AU Optronics <2409.TW>.

The main TAIEX share index <.TWII> edged up 4.7 points to 7,715.10, the highest close since June 26, 2008, finishing this week with a 1.9 percent gain.

The banking and insurance sub-index <.TFNI> outperformed the broader market, rising 1.34 percent, with Cathay Financial <2882.TW> up more than 2 percent.

Turnover was thin at T$118 billion ($3.7 billion), compared with Thursday's T$165 billion and a daily average of T$130 billion this week.

LCD makers AU Optronics and Chi Mei <3009.TW> fell 2.41 percent and 0.58 percent, respectively, after their larger Korean peer LG Display <034220.KS> said on Thursday that average LCD panel prices would decline, while shipments were expected to rise by less than 10 percent. [ID:nSEO366638]

"The market is caught between investors' unwillingness to buy at such high prices and a reluctance to sell on brighter outlook of the broader economy," said Tom Tang, a vice president at Masterlink Investment Advisory.

Tang expected the main index to stage a pull-back next week, but could find support at its 10-day moving average at 7,600 points.

"The effects from positive earnings have already worn off, and the main index could come under greater pressure of profit-taking in the upcoming week."

Shares of TSMC <2330.TW>, the world's largest contract chip maker, fell 2.98 percent. A local newspaper reported that its chairman, Morris Chang, is likely to announce a resumption of salary rises for employees following the sector's recovery.

But Mediatek <2454.TW>, the most-actively traded stock by turnover, climbed almost 3 percent after Morgan Stanley reiterated its overweight rating on Mediatek shares on fair valuation and a mild decline in the fourth quarter.

Smartphone maker HTC Corp <2498.TW> advanced 2.31 percent. Its larger rival, Nokia <NOK1V.HE>, the world's top cellphone maker, reported its worst quarterly result after losing its smartphone market share. [ID:nLF596616]

HOT STOCKS

-- Electronics parts giant Hon Hai <2317.TW> fell 0.76 percent. Sources told Reuters on Thursday that the Hon Hai Group would invest more than $1 billion to build a production facility in the southwestern Chinese city of Chengdu. [ID:nTP102315]

-- DRAM makers fell, with Powerchip <5346.TWO>, Taiwan's top computer memory chip maker, down 4.35 percent and ProMOS <5387.TWO> 6.84 percent lower.

Taiwan Innovation Memory Co (TIMC) had requested less capital from the government as the DRAM chip sector emerges from its worst slump. [ID:nTP89400]. ---------------------TAIEX IN PERSPECTIVE-----------------

Move on day 0.06 pct

Close on day 7,715.10

2009 intraday high 7,780.66

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-cl ick on [ID:nTP170358]