Since Sept 18, the NT$500 billion (S$23 billion) government-owned fund has hunted bargains as the market suffered heavy losses.

The intervention was previously scheduled to end on Nov 17 but the government has decided to extend it until Dec 17.

'Uncertainty over the international financial climate remains in place. The management committee of the fund decided to extend the support,' vice finance minister Tseng Ming-chung told reporters.

The fund was set up in 2000, with the aim of preventing steep market declines.

Last month, the government halved the daily downside limit to 3.5 per cent for two weeks to support the market, but critics said the measure caused a liquidity shortage with many investors reluctant to buy on fears of difficulties in selling.

The market closed up 0.34 per cent on Friday as profit taking ate away at early gains after a Wall Street rally overnight on weak market sentiment.

Taipei's bourse has fallen almost 50 per cent this year. -- AFP