Taipei  - Taiwan's stocks dipped 3.34 per cent Monday as investors turned cautious ahead of weaker-than-expected sales reports due to be released by major companies later this week, dealers said.

The TAIEX index opened slightly higher, but strong sales soon erased earlier gains, driving the benchmark index down to close at 6,628.02, down 228.72 points or 3.34 per cent.

Dealers said many big firms were to release their May sales figures this week, which are expected to be down from the previous month due to a brisk reduction in global demand.

Market sentiment was further dampened by Credit Suisse Group AG's Monday report advising investors to sell their Taiwan stocks and switch to investments in cheaper South-East Asian markets, as Taiwan has become an over-valued market.

The local index has soared 49 per cent this year as gradually warming relations with China attracted foreign investors to invest strongly in Taiwanese stocks.(dpa)