The U.S. market's strength helped lift the main board early in the session, but selling pressure grew as the benchmark index approached the 6,600 level.
The sharp gains on Wall Street failed to restore investors' confidence.
Wall Street's losses overnight weighed on market sentiment.
Mobile phone stocks primarily contributed to the main board's rise given hopes continued strong demand will help Taiwanese handset makers report solid revenue growth in the next few months.
Investors seemed to put concerns over panel oversupply behind, and now expect robust demand for LCD TVs to continue in the first quarter.
In addition to the strong U.S. performance last night, there is already talk in the market that February revenue figures (to be announced before March 10) may turn out to be better than expected.
Companies such as LCD and mobile phone stocks, that are expected to report solid revenue growth given an upbeat first-quarter outlook, were especially favored.
On top of declines in the US overnight, losses on UMC further weighed on the benchmark index.