TAIPEI — The local bourse pulled back yesterday from a rally a day earlier amid renewed concerns over Europe’s debt problems after Spain’s 10-year bond yield hit its highest level since the launch of the euro in 1999, dealers said.
Many investors also stayed on the sidelines ahead of a two-day U.S. Federal Reserve policy-making meeting set to open later yesterday, waiting to see whether the U.S. central bank will further ease monetary policy to boost the economy, they said.
The weighted index edged down 8.37 points, or 0.11 percent, at 7,273.13, after moving between 7,239.42 and 7,288.98, on turnover of NT$58.08 billion.
The market opened up 0.96 points and quickly moved to the day’s high on follow through buying from a session earlier, but profit-taking set in as eurozone debt concerns returned to haunt market sentiment and cause the index to close in negative territory, dealers said.
Select large-cap high-tech stocks, however, such as smartphone vendor HTC Corp. and personal computer supplier Acer Inc., continued their rebounds, helping the broader market fend off downward pressure by the end of the session, they said.
“Market attention has shifted to Spain,” Hua Nan Securities analyst Stan Chang said. “A spike in the bond yields in Spain dwarfed an upbeat mood caused by the parliamentary elections of Greece, where voters decided to stick to the austerity measures the country was previously committed to.”
The 10-year government bond yield in Spain rose overnight above 7 percent, a level which prompted many investors to believe that the European country will follow in the steps of Ireland, Portugal and Greece and seek a bailout.
“Although the Greece vote has provided some comfort to the market, the debt problems in the eurozone are far from over, and uncertainty still weighed on market sentiment,” Chang said.
Chang said, however, that some market heavyweights continued their uptrend on bargain hunting to help the broader market remain well above 7,200 points.
Among the winning stocks, HTC closed up 3.90 percent at NT$386.00, and Acer ended up 1.87 percent at NT$32.70.
“Amid lingering European financial woes, investors should also keep a close eye on the U.S. Fed’s meeting to see what the U.S. can do to take on the global economic slowdown,” Chang said.
In trading Tuesday, the paper and pulp sector suffered the heaviest losses among the eight major sectors of the market, finishing down 1.03 percent. Financials fell 0.89 percent, textile shares shed 0.41 percent, and the construction sector closed down 0.34 percent.
Machinery and electronic stocks lost 0.21 percent, and food shares fell 0.18 percent.
Cement stocks and plastics and chemical shares were the only groups to finish in positive territory, edging 0.01 percent and 0.49 percent higher, respectively.