Taipei  - Taiwan's stocks plummeted nearly 4 per cent Tuesday on bearish sentiment following Wall Street's sharp fall and a new high in local inflation, dealers said.

The local stocks Weighted Price Index, which opened sharply lower, plunged 289.26 points, or 3.94 per cent, to close at 7,051.85, its lowest level since November 2006.

All three major institutional investors sold heavily, net-selling a total of 20.759 billion Taiwan dollars (685 million US) worth of local stocks, fueling the bearish sentiment triggered by Wall Street's sharp fall overnight.

Stock analysts said the failure of the government in checking inflation also discouraged investors. Latest government statistics showed that the island's inflation hit an
8-month high in June due to food and energy price hikes, with the consumer price index soaring to 4.97 per cent with no sign of going down.

All eight major sectors fell, with petrochemicals leading the day's declines with 5.5 per cent, followed by cement's 5.4 per cent, financials' 5.1 per cent and electronics' 3.6 per cent. (dpa)