Tel Aviv shares ended Sunday higher, lifted by the long-awaited appointment of a new Bank of Israel governor and by a higher close on Wall Street over the weekend.

The TA-25 index of blue chip stocks got off to a strong start in the morning, sagged below 1,300 at mid-day but got a second wind after the government announced in the early afternoon that Karnit Flug would take over as central bank chief. The index finished up 0.7% at 1,305.57 and the broader TA-100 was up about the same amount at 1,729.27. Turnover, however, was a thin NIS 724.3 million.

"Her ideological closeness to the previous governor, Stanley Fischer, signals a continuation of low interest rates in the coming period," said Kobi Levi, fixed-income manager at Helman Adubi, explaining the market's positive reaction. Gains on Wall Street also helped, he said. "The U.S. stock market is keeping a positive tone in the wake of the agreement putting off a decision on the deficit ceiling until next year, which is saving the United States the risk of insolvency."

Global stock markets climbed to a five-year high on Friday as investors bet the Federal Reserve would extend its stimulus policy well into 2014.

The Dow Jones industrial average closed up 0.2% at 15,399.65 while the Standard & Poor's 500 Index added 0.7% to 1,744.50. and the Nasdaq composite 1.3% to 3,914.28. The Nasdaq is trading at levels last touched in September 2000 although it is still 24% from its peak before the tech bubble burst earlier that year.

MSCI's index that tracks the equity performance of 45 countries rose 0.7% to highs last seen in January 2008, while the broad Stoxx Europe 600 rose for a seventh successive day, its longest winning streak this year.

Uncertainty over when U.S. interest rates will rise caused the dollar to sink to an eight-month low. The greenback edged down 0.06% to a Bank of Israel rate of NIS 3.5330 while the euro strengthened 0.2% top NIS 4.8325.

In the bond market, the Tel-Bond 20, 40 and 60 indices rose as much as 0.27%, bringing their gains thus far this year to 6%. Leading the way was IDB Development Corporation, which rose 2% to 3% after a court ordered trustees to release NIS 520 million to repay bondholder debt. Medium- and long-term government bonds also rose in tandem with gains for U.S. treasuries over the weekend.

Technology shares paced the market higher on Sunday, led by a 4.7% advance for Allot Communications and rise of 3.2% for EZchip, 3% for auto-security-technology maker Ituran and 2.8% for Nova Measuring Instruments.

Online translation company Babylon finished down 6.6% in heavy trading of nearly NIS 24 million after it reported receiving a warning letter from Search engine Yahoo saying Babylon had violated certain terms of their agreement. Yahoo said it would give the company a chance to correct the problems.

Biotech stocks were sharply lower on Sunday, led by an 18.9% drop for BioCancell after the company said it was suspending clinical trial of its BC-819 treatment for pancreatic cancer. Mazor Robotobics, a maker of surgical guidance systems, closed down 7.3% after it reported on Friday that it would sell up to two million American Depositary Shares in a public offering.

Other biotech shares to end lower included Photomedix, which led the TA-100's list of losers on Sunday with a 7% drop. Evogene was off 4.6%, OPKO Healthcare by 4% and Protalkix by 2.2%. Against that, Compugen was the top gainer among TA-100 shares with a 4.9% rise and Clal Biotechnolgy added 3.4%.

Israel Chemicals led the most actives, with just under NIS 75 million shares changing hands on a gain of more than 2%. Oil Refineries Limited extended its rebound from Thursday, adding 2.6% as it takes steps to raise money and cut costs in the face of two quarters of losses.

Reuters contributed to this report.