Taipei  - Taiwan stocks lost 2.88 per cent Monday, dragged down by Wall Street's sharp decline over US banking woes in previous trading, dealers said.

The main TAIEX index opened sharply lower and extended its heavy losses to close at 4,425.83, down 131.32 points, or 2.88 per cent.

Dealers said US banking fears put local finance shares under heavy pressure, and reports about lender HSBC's plan to scale back its US consumer finance operations further dampened the market sentiment.

All eight major sectors fell with the financial sub-index dipping 6.3 per cent to become the day's biggest loser, followed by construction's 4.6 per cent and cement's 4.5 per cent. (dpa)