Oct. 29 (Bloomberg) -- Farglory Land Development Co. led declines by Taiwan builders after the United Daily newspaper said the central bank asked the island’s state-owned lenders to curb loans used for property investment.

Central bank Governor Perng Fai Nan also requested executives at Bank of Taiwan, Land Bank of Taiwan and Taiwan Cooperative Bank to impose more stringent checks on borrowers, the newspaper said, without saying where it got its information from. Deputy Governor George Chou wasn’t immediately available at his office for comment.

An index tracking 33 construction companies on the Taiex index plunged 6.4 percent to a two-month low as of 11:01 a.m. after more than doubling this year. Farglory, Taiwan’s largest developer, sank 5 percent to NT$69. The Taiex slumped 3.5 percent.

“Such an act, if true, will suppress buying interest,” said Farglory spokesman Hung Chih-hung. “Around 15 percent of our clients are speculators.”

Cathay Real Estate Development Co., Taiwan’s third-largest developer by market value, lost 5.7 percent to NT$13.25, the most since July 13.

“Perng is sending out a message to say he is concerned with the prices,” said Cathay Real Estate spokesman Chen Ren Tse. “If there’s any real implementation, it will adversely affect buying sentiment greatly.”

To contact the reporter on this story: Weiyi Lim in Taipei at Wlim26@bloomberg.net

Last Updated: October 28, 2009 23:19 EDT