* Four-month streak of y/y export increases ends
* Exports to China down 8.4 pct, to U.S. off 8.5 pct
* Electronics and IT exports rise 'marginally'
By Faith Hung and Roger Tung
TAIPEI, Oct 7 (Reuters) - Taiwan reported an unexpected fall in exports in September, with shipments to its largest markets, China and the U.S., dropping significantly.
The Ministry of Finance said that exports, which had risen on an annual basis in the four preceding months, declined 7.0 percent in September. A Reuters poll of economists had forecast an increase of 0.45 percent, and the weakest projection was for a fall of 1.8 percent.
In August, exports rose 3.6 percent from a year earlier.
In September, exports to China tumbled 8.4 percent, compared with August' s increase of 2.9 percent. Shipments to the U.S., up 0.9 percent the previous month, fell 8.5 percent in September.
For the month, the trade surplus was $2.35 billion, which compared with the poll's median forecast of $4.32 billion and the August figure of $4.59 billion.
The finance ministry said exports of electronics, IT and communications products rose "marginally" in September. It said demand was soft for mineral products - which are mainly petroleum-related, such as plastics - as well as for basic metals and optical equipment.
Taiwan is home to some of the world's largest chipmakers, who earlier this year were betting on a recovery in the United States to counter a slowdown in China, where a sizable amount of its exports end up in smartphones and other consumer gadgets.
But Michelle Tsai, an analyst with Jih Sun Securities in Taipei, said "We don't expect an improvement in overall export numbers until second quarter of next year, when the situation in the U.S. should start recovering."
"We used to be dependent on China as a trade market, but now it's transformed into one of our main export competitors, so we don't have as much of an opportunity to benefit," she said.
Tsai said Taiwan is "not going to get much help from the U.S." as worries over the debt ceiling have started to hit consumer confidence."
Taiwan's export orders, which typically lead actual exports by two to three months, in August came in well below expectations. Those from China stalled but U.S. ones were up nearly 10 percent on continued demand in the electronics sector. Overall orders were 0.5 percent higher, the same percentage increase as in July.
"We do not need to over-panic on the poor headline growth" in exports, said Raymond Yeung, senior economist of ANZ in Hong Kong.
He said September's exports were just 1.5 percent lower than August's, which is in line with change in the three-month average.
Yeung called Taiwan's tech sector "resilient" and said "we cannot deem the 7 percent y/y contraction in September a full representation when gauging Taiwan's overall external demand."
According to the HSBC Taiwan Purchasing Managers' Index, business conditions in Taiwan's manufacturing sector in September improved for the first time since April, with the PMI rising to 52 versus 50 in August.