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Taiwan's Taiex drops, led by worries over U.S.

Taiwan's Taiex drops, led by worries over U.S.

Taiwan's Taiex index fell after comments from Federal Reserve policy makers suggested the central bank may keep raising interest rates in the U.S., the island's biggest overseas market after China. Exporters such as Hon Hai Precision Industry Co. and Inventec Co. led declines.
"People are increasingly worried about U.S. demand because the Fed may continue tightening," said Mike Shiao, a fund manager at Invesco Taiwan Ltd. in Taipei, which oversees US$1.3 billion in assets.
Travel-related companies such as China Airlines and Phoenix Tours International Inc. rose after the Taiwanese government said it may allow up to 1,000 Chinese tourists a day to visit the island.
The index lost 13.12, or 0.2 percent, to 6,441.46 at the close of trading in Taipei. It dropped 0.4 percent yesterday. About six stocks declined for every five that gained. Futures due in August added 0.3 percent to 6379.
Hon Hai, Taiwan's largest electronics company, fell NT$2.50, or 1.3 percent, to NT$191.50. Inventec, a maker of notebook computers, dropped NT$0.35, or 1.8 percent, to NT$18.95.
Bonds stronger
Phoenix Tours, Taiwan's only publicly traded travel agent, jumped NT$3.50, or 6 percent, to NT$61.80. China Airlines, Taiwan's largest airline, climbed NT$0.20, or 1.4 percent, to NT$14.70. EVA Airways Corp., the second-biggest Taiwanese airline, added NT$0.05, or 0.4 percent, to NT$12.85.
Taiwan may allow up to 1,000 Chinese tourists a day to visit the island, Joseph Wu, chairman of the cabinet's Mainland Affairs Council, said at a briefing in Taipei yesterday. The council is the country's top policy maker on China.
Taiwan's 10-year bonds rose for a second day on speculation a decline in local stocks lured investors to government debt.
Economic activity is likely to slow in the next three months, according to a report issued by the Council for Economic Planning and Development last week.
"As the economy slows, the mood is for investors to be bullish on bonds," said Liao Yu-ping, a fixed-income trader in Taipei at Grand Cathay Securities Corp., a unit of Taiwan's eighth-largest financial firm.
"Some money flowed out of the stock market and into bonds."
The yield on the benchmark 1 3/4 percent bond due in March 2016 fell 2.4 basis points, or 0.024 percentage point, to 2.075 percent, according to Gretai Securities Market, Taiwan's biggest exchange for bonds. The price rose 0.2071, or NT$207.1 per NT$100,000 face amount, to 97.1747. Bond yields move inversely to prices.
The yield may fall to 2.05 percent next week, Liao said.