Taiwan's benchmark stock index had its biggest decline in eight years as the opposition party organized street protests to challenge Chen Shui-bian's re-election, calling for a recount and a probe into whether he faked an assassination attempt.

　　The TWSE Index plunged 6.7 percent, the biggest drop since January 1996, to 6,359.92 at the close in Taipei. Taiwan Semiconductor Manufacturing Co, the world's largest supplier of made-to-order computer chips, and the 15 other most actively traded stocks fell almost 7 percent, their daily limit.

　　"Investors will stay out of the market until one side accepts defeat or the court starts the recount process," said Yu Reming, who manages the US$148 million Balanced Fund at Prudential Securities Investment Trust Co.

　　The Morgan Stanley Capital International Asia-Pacific Index slid 1.3 percent. South Korea's Kospi and Hong Kong's Hang Seng indexes slumped, and benchmarks fell in all other markets except China's mainland and New Zealand. Indonesian markets were shut for a holiday.

　　Toyota Motor Corp and Nissan Motor Co led declines in Japan, after Merrill Lynch & Co recommended investors lower holdings in automakers as the yen surged against the dollar last week. The Nikkei 225 Stock Average dipped 0.9 percent to 11,318.51.

　　Taiwan Semiconductor sank 6.4 percent to 59 New Taiwan Dollars (US$1.77). United Microelectronics Corp, the world's second-largest supplier of made-to-order chips, slumped 6.9 percent to NT$29.90.

　　Taiwan's Nationalist leader Lien Chan asked protesters to continue their demonstration until a recount is ordered in an election decided by about 30,000 of 13 million votes cast.

　　The TWSE had gained 16 percent in the year before yesterday, partly on expectations that Lien, 67, would win the election and allow Taiwan Semiconductor and other chipmakers to build plants in China's mainland for the first time.

　　The TWSE may extend its drop today because the exchange limits daily declines in shares to no more than 7 percent. Taiwan's dollar slid 0.3 percent, the biggest slide since October.

　　South Korean stocks slid as political unrest in Taiwan reminded some local investors about the instability of their own government since the impeachment of President Roh Moo Hyun earlier this month. The Kospi index fell 2.2 percent.

　　Samsung Electronics, the largest company by market value, lost 2 percent to 544,000 won (US$468). Hyundai Motor Co, the nation's largest carmaker, dropped 2.1 percent to 51,800 won.

　　Tens of thousands of people have gathered in Seoul every weekend to take part in a candlelit rally to protest Roh's March 12 impeachment by lawmakers.

　　"The impact from unstable political situations on a neighboring economy's stock market revived concern about the effect of political instability in Korea," said Kim Young Joon, who manages US$250 million at Samsung Investment Trust Management Co in Seoul.

　　Stocks in Hong Kong dropped, dragging the Hang Seng index down 1.9 percent to the lowest since December 30. HSBC Holdings Plc, the world's second-largest bank by market value, shed 1.7 percent to 116.50 Hong Kong dollars (US$14.94). China Mobile, the world's biggest mobile phone company by users, dropped 3 percent to HK$22.40.

　　Toyota, the world's largest automaker by market value, fell 1.9 percent to 3,690 yen (US$34.44). Each one-yen gain against the dollar costs the company about 25 billion yen in operating profit, Toyota said in February.

　　Nissan, Japan's third-largest carmaker, declined 1.9 percent to 1,160 yen. Nissan gets about 80 percent of its operating profit in North America.

　　Masatoshi Kikuchi, chief equity strategist at Merrill Lynch's Japan brokerage unit, cut his investment recommendation on automakers and the rubber-products industry to "neutral" from "overweight," saying expectations for a weaker yen against the dollar have diminished in the past month.

　　(Bloomberg News)