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Taiwan shares jump in morning trading

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Taiwan shares jump in morning trading

Taipei, Dec. 21 (CNA) Share prices in Taiwan soared Wednesday morning after the government announced that the National Stabilization Fund was ready to lend support to the slumping local bourse, which has been hurt by the European debt crisis and slowing global demand, dealers said. The financial sector led the rally as investors also hailed a newly unveiled market-opening measure by the Financial Supervisory Commission (FSC) that will allow Chinese banks to acquire stakes in their counterparts in Taiwan, they said. As of 11:13 a.m., the benchmark weighted index had risen 4.31 percent to 6,950.07 on turnover of NT$54.65 billion. "The announcement of the National Stabilization Fund's possible intervention in the local stock market has successfully bolstered market sentiment, as investors hailed the long-awaited show of strong government support," MasterLink Securities analyst Tom Tang said. Vice Premier Sean Chen said Tuesday that in the wake of the death of North Korean leader Kim Jong Il, which could lead to instability in the region, the NT$500 billion (US$16.4 billion) National Stabilization Fund would enter the stock market. Chen said the Cabinet made the decision after a fund management committee meeting. He said the meeting took into account the impact of Kim's death in a bid to prevent further volatility amid unfavorable external factors. Soon after news of Kim's death surfaced Monday, the local bourse fell below the crucial 6,700 support level before rebounding mildly later in the day. As of Tuesday, the benchmark weighted index had fallen more than 25 percent from the beginning of the year amid concerns over the world's sluggish economic fundamentals. Before Tuesday's announcement, anemic trading volume indicated that many investors were still reluctant to hunt bargains in the local bourse, even though many stocks across the board appeared cheap after the massive sell-off, Tang said. "The push by the government encouraged many investors to return to the market today," Tang said. "In particular, financial stocks are the favorite of investors at the moment as their valuations are very attractive." The sub-financial sector rose 6.63 percent after the FSC said it would allow Chinese banks to acquire a stake in their counterparts in Taiwan from Jan. 2, 2012. According to the FSC, a single Chinese bank can acquire up to 5 percent of a Taiwanese bank or a financial holding company. Along with qualified domestic institutional investors (QDII) from China, the total stake they can own in a Taiwanese financial entity cannot exceed 10 percent. Among financial stocks, Cathay Financial, Mega Financial and Fubon Financial rose 7 percent, the maximum daily increase allowed in Taiwan's stock exchange, to NT$29.95, NT$18.85 and NT$29.95, respectively. Tang said the local bourse may continue to move higher following the government's show of support in the near term but is likely to face stiff resistance as the benchmark index approaches 7,400. (By Frances Huang)