Taipei - Taiwan's stock market surged nearly 4 per cent Thursday in response to the government loosening restrictions on investment in China.

Led by China-related shares, including shipping and electronics, the Taiex index rose 200 points shortly after the stock market opened Thursday.

In the afternoon, it closed at 6,974.51, up 263.87 points, or 3.9 per cent.

On Thursday, Taiwan's cabinet relaxed restrictions on Taiwanese firms investing in China and also allowed Chinese firms to invest in Taiwan. The new rule is to take effect August 1. (dpa)