Market Report / Banks Lead TASE Higher in Slim pre-Passover Trading

Israeli bank stocks rebound after feeble fourth-quarter earnings; investors hoping Cyprus will avoid financial meltdown.

Bank shares led the Tel Aviv Stock Exchange higher Sunday at the start of a holiday-shortened trading week, following a rebound on Wall Street on Friday.

The blue-chip TA-25 index rose 0.7% to close at 1,247 points, while the broader TA-100 advanced by the same to 1,112.

Total turnover was just NIS 653 million due to the absence of foreigners (who don't typically trade on Sunday) and the holiday ahead.

The TASE will be closed Monday and Tuesday and trade shorter hours each day for Passover.

Bank shares rallied in the first full day of trading since the top two lenders, Hapoalim and Leumi, filed their fourth-quarter 2012 results. Although earnings for the three months were weak, the two shares rebounded smartly: Hapoalim gained 2.2%, Mizrahi-Tefahot 2.1% and First International 1.7%, while Leumi and Israel Discount Bank both gained more than 1%.

Global equity markets and the euro advanced Friday on hopes Cyprus will avert a financial collapse, taking succor from an agreement that shielded Greek banks from the Cypriot crisis and remarks that the island nation was hours away from a bailout.

Greece's Piraeus Bank agreed to take over the Greek branches of Cyprus' troubled banks in a deal that lets the country shrink its bloated banking sector. The deal involved the transfer of 17 billion euros of loans and 14 billion euros of deposits, a source close to the matter told Reuters.

On Wall Street Friday, the S&P 500 Index rose 0.7% to 1,556.89 and the Nasdaq Composite Index rose the same percentage to 3,245.00. In Europe, the pan-European FTSEurofirst 300closed 0.1% lower at 1189.44.

The euro rose 0.74% to $1.2992 last week for its first weekly gain in seven weeks on hopes Cyprus had averted a financial meltdown.Against the shekel, both the euro and the dollar weakened Friday, with the euro shedding 0.2% to a Bank of Israel rate of NIS 4.7430 and the greenback losing 0.27% to NIS 3.6660.

Yitzhak Tshuva's Delek Group ended Sunday up 1.8% after the holding company reported a 2012 net profit of NIS 446 million. Although that was down 83% from 2011, excluding one-time items it was a rise of nearly 90% to NIS 1 billion.

Alon Blue Square Holdings rose just over 1%. The retailing group narrowed its fourth-quarter loss to NIS 8 billion from NIS 69 million a year ago. Although revenue eased 3.6%, cost-cutting boosted operating profit 156% to NIS 49.7 million, nearly tripling the operating margin to 3.2%.

Technology shares were the biggest losers on the TA-100, with TowerJazz down 4.2%, Allot Communications down 3.1%, Mellanox off 2.5% and EZchip down 1.8%.

With reporting by Reuters.

Bloomberg
Limor Edrey