(Adds schools in Taipei, New Taipei to go online, analyst quote, updates stock movements) TAIPEI, May 17 (Reuters) - Taiwan’s economic fundamentals are good with demand for export orders strong and production activities normal, and the government is prepared to stabilise the stock and foreign exchange markets if needed, the island’s premier said on Monday. A sudden surge in domestic COVID-19 infections, more than 400 over the past week, and Saturday’s raising of restrictions in the capital Taipei, have spooked a population that had become used to life carrying on almost as normal with the pandemic previously well under control. The government has sought to reassure that the economy remains strong and there is no undue cause for alarm, even as the stock market has swooned. Writing on his Facebook page, Premier Su Tseng-chang called on people not to panic or spread rumours. “Domestic economic fundamentals are good, export order demand continues to be strong, and production is operating normally,” he said. Taiwan’s trade-dependent economy has performed strongly helped by global demand for its tech products to support the work and study from home boom during the pandemic. Su said he had asked relevant financial departments of the government to keep a close watch on movements in the stock and foreign exchange markets, and that they are prepared to take stabilising measures. Taiwan’s benchmark stock index fell as much as 3% shortly after opening on Monday morning before recouping some losses and was down around 2.3% by 0300 GMT. Mega International Investment Services Corp analyst Alex Huang said it was a good sign stocks had not fallen too badly. “It shows panic has not set in,” he said. The governments in Taipei, and the city next to it which has also had its COVID-19 alert level raised, have asked people to stay at home as much as possible. The Taipei and New Taipei city governments said on Monday schools would have to teach online until May 28. Taiwan’s central bank said it would be asking reporters to call in for its news conferences, rather than holding them in person. (Reporting by Ben Blanchard and Yimou Lee; Additional reporting by Liang-sa Loh and Emily Chan; Editing by Christian Schmollinger, Jacqueline Wong and Gerry Doyle) Our Standards: The Thomson Reuters Trust Principles.