Taipei, May 11 (CNA) The local bourse came under pressure Friday as sentiment was dampened by JP Morgan's trading losses of US$2 billion (NT$58.8 billion), dealers said.
The large losses suffered by JP Morgan since the beginning of April raised concerns over the possibility of a domino effect among international financial institutions, which would create a new crisis in the global financial markets, dealers said.
Worries about how Greece will deal with its debt problem remained in place, weighing on market sentiment as the European country has not yet form a coalition government since its parliamentary vote Sunday, they added.
The weighted index closed down 82.64 points, or 1.10 percent, at 7,401.37 after moving between 7,382.95 and 7,473.55. Turnover during the session totaled NT$67.44 billion (US$2.29 billion).
The market opened down 0.19 percent on a lackluster Wall Street overnight, and selling escalated as pressure rose in the financial sector on concerns over the global financial situation, dealers said.
"JP Morgan's stunning losses came largely from derivative trading. It seemed that the financial nightmare of 2008 has returned to haunt investors," Grand Cathay Securities analyst Mars Hsu said.
"It was no surprise that local financial stocks trended lower, pushing the index down," Hsu said.
The financial and foodstuff sectors suffered the heaviest losses among the largest eight sectors of the market, finishing down 1.7 percent.
Among the losing financial stocks, Mega Financial Holding fell 3.82 percent to end at NT$21.40 and China Life Insurance shed 1.34 percent to close at NT$25.75.
"Many investors are afraid that a global economic recovery will be affected by the latest negative leads in the financial markets," Hsu said. "Investors prefer to take their money and run at the moment."
Hsu said the debt problems in the eurozone also remained a concern for investors, turning many of them away from the trading floor.
"If Greece fails to form a coalition government soon, another parliamentary vote may be held, which would create more uncertainty in the market," Hsu said.
At the end of the session, the cement, textile, and plastics and chemical sectors shed 1.3 percent, paper and pulp, and construction sectors all lost 1.2 percent, and machinery and electronics stocks closed down 0.8 percent.
In the high tech sector, smartphone maker HTC fell 4.23 percent to NT$430.00, and cell phone camera lens supplier Largan Precision dropped 3.67 percent to NT$472.00.
Acer closed down 0.62 percent at NT$32.00, recovering from an early low of NT$30.35 on bargain hunting after it reported a 20 percent month-month drop in unconsolidated sales for April.
(By Frances Huang)