"MSCI was very concerned about the market impact of such a large weightingchange in the indices being initiated over a very short space of time," MSCIAsia executive director John Fildes told Reuters Television.

Rather than jumping to 100 percent in one go, as it did with South Korea in1998, MSCI will raise Taiwan to 65 percent on May 31, 80 percent on November30 and 100 percent on May 31, 2001.

The MSCI weightings are used by international investment funds as a keygauge of their exposure to the world's major and emerging stock markets.Fildes said Taiwan's slowly easing capital restrictions, a legacy of itsrivalry with communist China and fear of mainland capital incursions, made aonce-off reweighting difficult. One Taiwan fund manager said theunexpectedly protractedMSCI rollout would sour sentiment in the stock marketon Wednesday.

"I feel that in the short term this is bad news," said Michael On, presidentof Taipei's Beyond Asset Management. "This is slower than expected. ButTaiwan's stock fundamentals are improving and in the long run we shouldstill see gains."

MSCI's reweighting plans have roiled Taiwan stocks -- and colouredinternational institutions' investment plans -- since it said in August itwould boost Taiwan to 100 percent in 2000.

But MSCI has kept the market guessing ever since.

Some reports put the first step in February 2000, but MSCI said in Octoberit would begin in May 2000, citing worries over possible internationalcomputer failures arising from a rare leap year day on February 29.

Taiwan's finance ministry stirred the pot again on Friday by announcing thatit would double to US$1.2 billion the limit on any single foreigninstitution's investment in Taiwan stocks to accommodate growing globalinterest in local equities.

Tantalisingly, the ministry linked the liberalisation to MSCI's fullweighting plan - triggering a wave of local stock buying and foreign fundsinflows. The foreign fund buzz has added 10 percent to the benchmark TAIEXover the past 10 sessions.

Taiwan is the only market that is weighted in MSCI's global indices at lessthan 100 percent. South Korea was at 50 percent until August 1998, when itjumped to 100 percent in one shot. Malaysia, plucked from the indices afterimposing capital controls during Asia's Financial crisis, will be restoredat 100 percent on May 31, MSCI said on Tuesday.

Some Taiwan analysts have doubted the leap year explanation for the delays,saying they suspected MSCI had gotten cold feet about encouraging widerinvestment in Taiwan before its potentially tumultuous presidential electionon March 18.