Taipei - Taiwan's stocks rose 5.63 per cent on Monday, tracking strong gains late last week as investors bought strongly on bright prospects related to the island's plan to open itself for Chinese investments, dealers said.

The TAIEX index opened higher and extended its gains to close at 6,330.40, up 337.83 points, or 5.63 per cent, from Friday's trade.

Dealers said the government's permission for qualified Chinese institutional investors to invest in the local stock market from Monday and its plan to allow Chinese investments in Taiwan possibly by next month prompted foreign institutional investors to buy strongly.

Taiwan was expected to announce a set of regulations governing Chinese investments on the island at the end of May, following high-level talks with China in Nanjing late last month.

The move is tipped to usher in huge fund inflows from China that will help bolster the sagging local economy, predicted by the government to contract more than 2 per cent this year following a contraction of over 8 per cent in the final quarter of 2008.

In Monday's trading all major sectors rose, with the financial sub-index advancing 6.9 per cent to become the day's biggest winner, followed by construction's 6.5 per cent and textiles' 6.2 per cent. (dpa)