The weighted index rose 67.02 points to 7,649.23 on turnover of NT$115.09 billion (US$3.6 billion). Gainers led losers 1,439 to 1,135 with 283 stocks unchanged.

Financials rose 2.40 percent on reports that China hoped to finalise a currency settlement agreement with Taiwan soon, citing People's Bank of China deputy governor Hu Xiaolian.

"As foreign investors are starting to take vacations, we expect to see more gains in small to medium-sized stocks as local fund managers seek to push up prices before they close the book for the year," said Kerry Chen of Yuanta Securities.

Mega Financial rose 4.40 percent to NT$18.95 while Chinatrust Financial added 2.69 percent to NT$19.10.

Cement was 2.10 percent higher, with Taiwan Cement up 3.28 percent after it signed a memorandum of understanding with Hong Kong's Prosperity Minerals Holdings Ltd. to buy its Upper Value Investment.

Taiwan financials: Cathay Financial Holding Co. (2882 TT), the island's largest-listed financial services company, climbed 2.1 percent to NT$57.20 and Fubon Financial Holding Co. (2881), Taiwan's second largest, increased 2.2 percent to NT$37.30. China and Taiwan should speed up the implementation of a cross- strait currency settlement system, Hu Xiaolian, a deputy governor at the People's Bank of China, told reporters in Taipei yesterday.

Acer Inc. (2353), the world's second-largest computer supplier, added 3.1 percent to NT$82.60, the most since Nov. 12. The company held talks with several Japanese companies and plans to buy the personal computer unit of one of them, the United Evening News reported yesterday, citing Chairman J.T. Wang.

Henry Wang, a spokesman for Taipei-based Acer, told Bloomberg he hadn't heard of such talks.

Shin Kong Financial Holding Co. (2888), the owner of Taiwan's third-largest life insurance company, advanced 1.9 percent to NT$13.25 after it said its life insurance unit bought properties in Taipei for NT$$3 billion (US$93 million).