TAIPEI (XFN-ASIA) - Share prices were higher following a positive lead from Wall Street and on hopes for improved economic ties with China as negotiators from Beijing and Taipei prepare for a fresh dialogue.

Officials from China's quasi-official Association for Relations Across the Taiwan Strait (ARATS) and Taiwan's Straits Exchange Foundation (SEF) will begin five-day talks in Taipei from today to discuss, among other things, expansion of transport links between the two sides.

At 10.28 am, the weighted index was up 106.14 points or 2.18 pct at 4,976.80, off a low of 4,836.51.

Turnover was 40.97 bln twd.

"Thanks to stabilized international markets, the local bourse managed to gain more muscle" from the prospect of improved cross-strait ties, said an analyst with a domestic securities investment consulting firm.

Profit-taking pulled the index into negative territory for a while after opening gains, but the market recovered by midmorning on hopes over the China talks and some valuation buying, he noted

"Hopes for an expansion in transportation links apparently receives two-thumbs up from investors," the analyst said

ARATS president Chen Yunlin is leading a delegation of 74 for talks with Taiwan officials. The delegation will arrive in Taiwan shortly.

Chen and his Taiwanese counterpart Chiang Pin-kung will focus their dialogue on increasing direct passenger flights, opening direct cargo flights and shipping links, as well as shortening existing flight routes across the Taiwan Strait and food safety issues.

While transport and tourism sectors were boosted by hopes for expanded links with China, the analyst noted that investors also built positions in financials that had been battered previously due to the global financial turmoil.

"Investors are now betting on closer cross-strait financial ties," he said.

Besides domestic factors, international markets' response to the outcome of the Tuesday's presidential election in the US will affect the domestic bourse going forward, the analyst added.

The transport sector was up 6.01 pct, tourism rallied 5.98 pct, financials soared 4.69 pct and electronics gained 1.23 pct.

Among transport stocks, China Airlines rose 0.17 twd to 7.99, EVA Airways jumped 0.44 twd or 5.58 pct to 8.33 and Yang Ming Marine Transport was limit-up 0.63 twd or 7 pct at 9.74.

Formosa International Hotels rose 15.50 twd to 244.00, Ambassador Hotel surged 1.65 to 25.40, Chinatrust Financial soared 0.66 to 10.10 and First Financial advanced 1.05 to 16.60. All were limit-up 7 pct on expectations of closer China economic relations.

Acer was limit-up 3.00 twd or 7 pct at 45.95 after reporting third-quarter earnings results

(1 usd = 33.00 twd)

adela.lin@afxasia.com - xfnal/xfnrc

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