The benchmark TAIEX share index had risen as much as 1.51 percent in trade as overnight gains on Wall Street pulled up technology shares, but they soon succumbed to profit taking and the index ended at 5,721.31 points, up just 4.03 points.
Turnover was T$66.13 billion, up from T$57.08 billion a day. The financial sub-index rose 0.65 percent as investors' hopes of more mergers in the sector were rekindled by a Taiwan newspaper report that said the cabinet would announce a plan at the end of November to consolidate three state-run banks.
"The newspaper report boosted banking shares," said Chiang Cheng-sheen, a manager at Masterlink Investment Advisory. "Still, profit-taking in electronic stocks late in the trading showed that market sentiment is pretty weak."
The electronics sub-index ended down 0.13 percent.
Healthcare stocks like China Chemical & Pharmaceutical Co Ltd, Medics International Corp Ltd and Standard Chemical & Pharmaceutical Co Ltd soared the daily 7 percent limit after China reported a fresh outbreak of bird flu.
Megan Financial Holding Co Ltd was the third-most active stock by volume, rising 2.35 percent to end at T$21.80. Chinatrust Financial Holding Co Ltd jumped 3.9 percent to T$28.
Invented Appliances Corp, which makes hand-held devices and assembles Apple's pod, jumped 30.09 percent to T$140.5 on its first day of trade on the Taiwan Stock Exchange.
The shares are not subject to daily trading limits for the first five days upon listing. Display panel maker AU Optronics Corp fell 0.38 percent to T$39.0 after rising more than 2 percent in the day, the second most active stock by volume.
AU reported better-than-expected quarterly results after the market close. The most active stock was United Microelectronics Corp (UMC), which rose 0.27 percent to T$18.90 ahead of its quarterly results report on Wednesday.
UMC's larger rival Taiwan Semiconductor Manufacturing Co Ltd, rose 0.99 percent to T$50.80 after a newspaper report said it will boost capacity in the fourth quarter.
Siliconware Precision Industries Ltd, the world's third-largest microchip packager, closed flat at T$32.0.