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Israeli stocks set fresh highs on the second trading day of the new year as investors around the world returned to the markets bright-eyed and bushy-tailed after the holiday break. Stocks the world wide began 2011 with a bang. European shares were led up by construction and industrial stocks. The pan-European index FTSEurofirst gained about 1%, albeit on thin turnover, and French stocks roared, with the benchmark CAC-40 up 2.5%.

Over in Asia, performances were more mixed, as Tokyo shares retreated but South Korea's KOSPI gained nearly 1%. Hong Kong shares bounced 1.7%. In the United States, stocks began the day with gains as manufacturing and housing data pointed to a strengthening recovery.

Manufacturing grew in December for the 17th straight month, a report showed yesterday, suggesting U.S. growth could accelerate in 2011. Oil prices also bounced, above $92 per barrel in this case, in fond anticipation of stronger economic growth this year.

Back in the Holy Land, the benchmark TA-25 index gained 0.6% to a record 1,335 points and the broader TA-100 advanced 0.7% to 1,235 points. The Banks-5 index gained half a percent and real estate shares climbed 1.9%. Total turnover was in normal territory, at NIS 1.9 billion. To demonstrate how positive the sentiment on the floor was yesterday, the top decliner of the day was software company Fundtech, which fell just 1.9%.

Yet again, all Israeli eyes were on the "gas shares" - stocks and participation units linked to the oil and gas exploration industry. As the Sheshinski Committee filed its final recommendations, which were weaker than its interim conclusions (see pages 1 and 12 ), gas shares gained ground, but not exceptionally for this highly volatile sector.

Delek Energy advanced 4.2%, Delek Drilling gained 1.1% and Avner, which is also associated with the Delek Group, gained 1.9%. Ratio Oil Exploration - the liveliest share on the Tel Aviv Stock Exchange yesterday - advanced 3.9% on huge turnover of NIS 119 million, and Isramco rose 1.4%. Givot Olam, which is drilling onshore, not in the middle of the sea, gained 2.6%.

Africa Israel Investments shares bounded 5% after the company reported the NIS 502 million divestment of its stock in Derech Eretz Highways, which runs Highway 6. The proceeds will be used to retire B25 bonds, the company promised.

Clal Finance named eight shares that it thinks should be at the base of any sensible portfolio, all of which rose yesterday. Teva Pharmaceutical Industries gained 0.7%; the Bezeq phone company, which was the second-most active stock on the floor with turnover of NIS 97 million, gained 0.3%. Bank Leumi gained 0.3%, Azrieli Group advanced 2.5%, Gazit Globe gained 1.5%, Osem rose 2.4%, Paz Oil gained 2.6% and Delek Automotive inched up 0.1%.

With reporting by Reuters and Eran Azran.