Taipei - Taiwan stocks closed 2.37 per cent lower Thursday, driven down by Wall Street's overnight fall and news reports that local banks were to tighten house loans as suggested by the government, dealers said.

The TAIEX index opened sharply lower and extended its bearish trend to close at 7,355.69, down 178.26 points from Wednesday's trade, dealers said.

They said Wall Street's fall dampened the market sentiment at the start of trade, and news reports that the central bank asked local banks to tighten loans for property investment further discouraged investors.

The three major institutional investors reported a net sell-off of 25.13 billion Taiwan dollars (790 million US dollars) Thursday, dealers said. (dpa)