Expectations that the European Central Bank will act to ease Spanish and Italian borrowing costs lifted Asian markets - which later did the same for European markets, and finally for the Tel Aviv Stock Exchange as well. Bank shares led the way higher.
Shares got off to a quiet start yesterday, but by the end of the session the benchmark TA-25 index was up 1.25% to 1,118.73 points, while the TA-100 gained 0.9% to 993.20. The TA-Banking index enjoyed a spurt higher to 861.74, up 3.3%.
Among the leading indices, only the real estate index ended down, by a mere 0.1% to 236.04. Turnover was NIS 780 million, high by recent standards but lower than the year-to-date average.
Britain's Daily Telegraph yesterday published news that supported a weekend German report that the ECB planned to put a hard cap on Spanish and Italian bond yields.
The FTSEurofirst 300 provisionally closed up 0.5%, at 1,110,77 points, and has risen around 9% since the ECB's chairman, Mario Draghi, said late last month the central bank was prepared to do "whatever it takes" to save the euro. The euro rallied 1 percent to $1.2470.
In Tel Aviv, the collapse of a deal late Monday - under which Hong Kong's Hutchison Whampoa would have bought back control of Partner Communications from Ilan Ben-Dov - reverberated through the TASE yesterday. Partner shares fell 5% in New York overnight but by a more modest 2% in Tel Aviv yesterday.
Prices for the Series Bet bonds of Scailex, Ben-Dov's indebted holding company, plunged 15%. The shares plummeted almost 27%.
Bank shares rallied yesterday, with Bank Hapoalim gaining 3.5% and Israel Discount Bank adding 4.5%.
"The bearish atmosphere has reduced the valuation of the banks significantly," Adi Scop, banking analyst at IBI Israel Brokerage & Investments, said in a survey of the sector yesterday. "In our opinion the reductions offer an opportunity for investors who prefer to take advantage of the concerns to buy counter to the prevailing consensus."
Scop gave Hapoalim and Discount Buy ratings
Among companies reporting for the second quarter yesterday, Gazit Globe showed big improvement across the board in line with analysts' expectations.
Operating profit rose 18% to NIS 1.3 billion, and net profit by 2.5% to NIS 288 million. Its shares rose 0.9%.
Another real estate company, Property & Building Limited, posted a 1.5% decline in revenue from real estate operations to NIS 393 million, while net profit attributable to shareholders fell by two-thirds from a year ago to just NIS 26 million. Nevertheless, the shares rose 4.4%.
Clal Insurance Enterprises, which belongs to the IDB Group, turned in a second-quarter loss of NIS 126 million, which was due to the adjustment of actuarial tables under orders from the Finance Ministry. Clal stock ended up 2.4%.
In the bond market, inflation-indexed corporate bonds held steady while unlinked government bonds saw rises of up to 0.15%. Indexed government bonds were down as much as 0.2%.
Short sellers deepened their positions last week as the current round of second-quarter corporate earnings continues. The balance of shorts on the TA-25 jumped 40% to NIS 1.245 billion in the week that ended August 16. The week before, shorts stood at just NIS 887 million.
Reuters contributed to this report.
