TAIPEI (Reuters) -Taiwan shut down ahead of the arrival of strong Typhoon Kong-rey on Thursday with all cities and counties declaring a day off, financial markets closed and domestic flights cancelled for what is expected to be the largest storm by size in 30 years.

The storm is forecast to make landfall on the mountainous and sparsely populated east coast around 2.00 p.m. (0600 GMT), according to Taiwan's Central Weather Administration, with strong winds and torrential rain affecting almost all the island.

At one point a super typhoon, Kong-rey slightly weakened overnight but remained powerful as the equivalent of a Category 4 hurricane packing gusts of more than 250 kph (155 mph), according to Tropical Storm Risk.

Taiwan's weather administration labelled the storm a "strong typhoon", the most powerful storm level for Taiwan, adding it would be the biggest typhoon in size to hit the island since 1996.

Warnings for destructive winds of more than 160 kph (100 mph) were issued in the eastern county of Taitung, whose outlying Lanyu island recorded gusts above 260 kph (162 mph) before some of the wind-barometers there went offline.

Up to 1.2 metres (3.9 feet) of rainfall is expected in eastern Taiwan with destructive winds along coastal areas, according to the administration.

The defence ministry has put 36,000 troops on standby to help with rescue efforts while 1,300 people have been evacuated from high risk areas ahead of time, the government said.

Taiwan Semiconductor Manufacturing Co, the world's largest contract chipmaker and major supplier to companies like Apple and Nvidia, said that it has activated routine typhoon alert preparation procedures at all its factories and construction sites.

"We do not expect significant impact to our operations," it said in an emailed statement.

Taiwan's high speed railway, which connects major cities on its populated western plains, continued to operate with a much reduced service.

The government has warned people to stay away from the mountains and the coast.

Kong-rey is forecast to weaken further as it crosses the central part of Taiwan then move into the Taiwan Strait and graze China on Friday morning.

Subtropical Taiwan is frequently hit by typhoons. The last one, Typhoon Krathon, killed four people earlier this month as it passed through the south of the island.