TAIPEI: Taiwan will allow Chinese investors to invest up to 500 million dollars in the island's stock market, in a further step towards closer economic ties, the government said Saturday.

Starting Monday, Chinese institutional investors can own up to a 10 percent stake in local gas, financial or other companies controlled by the economic ministry, said Taiwan's Financial Supervisory Commission.

However, there is an 8 percent ceiling for shipping firms while Chinese investors are barred from buying airlines, air cargo, futures, construction, real estate and broadcasting stocks, it said.

The announcement came as three financial memoranda signed by Taipei and Beijing in November took effect on Saturday, paving the way for closer cooperation in banking, insurance and securities.

Among the memoranda is one that for the first time allows Chinese investors to place funds in Taiwan's stock market.