Authorities in Taiwan have unveiled measures to stabilize the island's stock market, which has failed to escape the global downspin.

Taiwan's leader Ma Ying-jeou on Monday instructed relevant departments to prepare to protect the local market from the deepening rout in global assets.

Authorities on the island are set to convene an emergency meeting on using stabilization funds to prevent the stock market from suffering further losses.

The fund, with 200 billion new Taiwan dollars (over 6 bln US dollars) borrowed from financial institutions and another 300 billion from funds and pensions, will be used to purchase weighted shares following approval.

Managers of Taiwan's four large public funds, namely the Labor Insurance Fund, Labor Pension Fund, Public Service Pension Fund and postal savings deposits, with an aggregate value of more than 7 trillion new Taiwan dollars in July, have said they will enter the stock market with at least 150 billion new Taiwan dollars when appropriate.

A total of 32 local securities companies have vowed to put an estimated 80 billion-plus new Taiwan dollars into long equities.

The island's financial supervisory commission announced on Sunday a ban on short selling Taiwanese shares at less than their closing prices from the previous day, after the TAIEX, the Taiwan stock exchange's benchmark index, fell below the 10-year moving average of 7,800 points on Friday.

However, the TAIEX continued to plunge on Monday, which opened sharply lower and shed nearly 7.5 percent in just under 90 minutes of trading, the biggest plunge in the Taiwan exchange's history.

It ended down nearly 5 percent on heavy turnover at the end of the day, after news that a stabilization fund might be used to support local shares.

The financial supervisory commission requested more earnings conferences by listed companies to help investors see the potential of oversold stocks and boost stock market turnover.

The commission also encouraged listed companies in banking, electronics and other sectors to buy back their own shares and purchase blue chip stocks on the open market to shore up market confidence.

Financial regulators said late Monday that the stock market plunge would not affect Taiwan's finances, which are backed by considerable foreign exchange reserves and current account surpluses.

The TAIEX opened slightly higher Tuesday and continued to regain lost ground during morning trading.