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Excitement mounted in the territories as the Palestinians elected a new leader and in Tel Aviv, stocks roared to record heights.

The day began with hesitant gains that strengthened as the day wore on, but the main thrust came shortly before closing as Wall Street started with a positive bias.

Banks and real estates fueled the gains, leading the TA-25 to close 1.7% higher at an all-time high of 852.3 points. The TA-100 index rose 1.4% to 872 points, also a level never reached before. Turnover was enormous at NIS 1.8 billion.

Prices also rose in the bond market: long-term Shahars gained 0.3% or more, and Galils rose 0.1%.

Surprisingly, given Israel's worries about the outcome of the Palestinian parliamentary election, the shekel gained ground. The dollar weakened by 0.25% against the local currency, closing at NIS 4.6.

On Tuesday, after a mere 13 year delay, Bank Hapoalim (TASE: POLI) finally sold its subsidiary, Otsar Hahayal, to the First International Bank of Israel, also known as Beinleumi, for an unprecedented 1.85 times its shareholders equity.  spotlight, suddenly announcing the sale of its subsidiary Bank Otsar Hahayal (68%) to First International Bank of Israel (TASE: FIBI) for NIS 703 million. Not only the five biggest banks surged ahead: so did the smaller one Union Bank. The banks index rose 1.7% today to 1,374 points. Bank Hapoalim rose 1.9% on turnover of almost NIS 170 million; Bank Leumi gained 1.1% on a volume of NIS 92 million; Mizrahi advanced 2.4% and Bank Discount rose 2.1%.

Combined turnover in the two FIBI stocks, 1 and 5, totaled NIS 6.5 million and they rose 4.6% and 2.9% resptceively.

Yesterday Union Bank shot up 7% on heavy turnover and today it retreated by 1.3%, again after much stock had changed hands. Earlier in the day Union announced selling its provident funds management company to the Ayalon insurance company.

Teva (Nasdaq, TASE: TEVA) spent most of the day well below the flatline but succumbed to the positive sentiment and ended 0.1% higher on enormous turnover of NIS 225 million. Tomorrow it completes its merger with Ivax Corp and regains the crown of biggest generic drug company in the world. Meanwhile, most Ivax shareholders opted for Teva shares in lieu of cash.

While on dual listed stocks, Koor (TASE, NYSE: KOR) jumped 2.1%. Partner (Nasdaq, LSE, TASE: PTNR) rose 0.9% - the mobile operator is paying "A Star is Born" Ninette Tayeb $250,000 for the exclusive rights to her musical and video clip content, by the way, for dissemination via third-generation technology.

Real estate continued to build its gains: the index rose 2.2% to 459 points, still well below the blue chips. Delek Real Estate rose 4.6% on a volume of NIS 18 million. This year, yes, in less than a month of 2006, the Delek Group company has risen 50%.

Africa Israel gained 2% and Azorim rose 1.7%.