Market Report / Bernanke Remarks Lift Finance Shares; Dollar Sinks

News that TASE chief Ester Levanon will step down at the end of the year doesn't faze Israeli traders; TA-100 index climbs 0.4%.

The Tel Aviv Stock Exchange learned on Wednesday that it will lose its CEO, Esther Levanon, at the end of the year, but that wasn't enough to deter investors from bidding up banking and insurance shares on news that the U.S. Federal Reserve remains flexible about the timing of its plan to cut back bond purchases.

In foreign currency trading the dollar resumed its decline against the shekel, prompting speculation that the Acting Governor of the Bank of Israel, Karnit Flug, will intervene in the market for the first time since taking office at the start of the month.

The remarks by Fed Chairman Ben Bernanke lifted the benchmark TA-25 index, which in early afternoon trading dipped to 1,215.86 points before closing at 1,223.72 points, a gain of 0.3% for the day. The broader TA-100 index did better, advancing 0.4% to 1,108.04 points on turnover of NIS 1.15 billion.

Finance shares were the day's standout. The Banks-5 index closed up 1.3%, at 1,163.14 points, and the TA-Insurance index climbed 1.9% to a finish of 1,436.48 points. Among insurers, Menorah jumped 1.98% and Harel rose 1.6%, while banking shares were paced by Hapoalim, up 1.6% in heavy trading of NIS 54 million, Bank Leumi's 1.4% gain and First International Bank of Israel's 1.2% rise.

Stock markets around the world rose on Wednesday after Bernanke said the timeline for the U.S. central bank ending its stimulus program this year was not set in stone. European shares rebounded from early weakness after minutes from a Bank of England meeting showed all policymakers voted against extending the bank's bond purchase program.

Just after noon New York time, the Standard & Poor's 500 was up 0.3% at 1,681.55 points and the Nasdaq Composite Index was up 0.4%, at 3,611.24% points. The benchmark 10-year U.S. Treasury note was up 13/32, the yield at 2.4832. The FTSEurofirst 300 closed up 7.56 points, or 0.6% at 1,198.71 points.

In foreign currency trading, the dollar lost 0.6% of its value against the shekel, to a Bank of Israel rate of NIS 3.5760, approaching a low not seen since May when the central bank moved to intervene. The euro gained almost 0.4% to NIS 4.7021.

"The dollar's drift lower is occurring at a very inopportune time for the Bank of Israel, which is in an interregnum between two governors," currency trader FXCM said on Wednesday. "For now, the Bank of Israel's attempt to stage a long-term reversal has been a complete failure It is unclear what the mandate is of its acting governor, Kranit Flug."

In the local bond market, the Tel-Bond 20, 40 and 60 indices were up as much as 0.42%, with Petrochemical Industries Series Vav bonds jumping 7.5% after a debt rescheduling agreement was reached with bondholders. The government's unindexed 10-year shekel bond rose 0.35%, cutting its yield to 3.71%. The index-linked equivalent rose 0.56% to a yield of 1.61%.

Among leading shares on Wednesday, Israel Chemicals fell 3.2% on turnover of NIS 103 million and Teva Pharmaceutical Industries dropped 0.3% on turnover of NIS 50.8 million. Yaron Dayagi, the CEO of Psagot Mutual Funds, said Wednesday that investors are moving out of heavy capitalization stocks like ICL and Teva to midcaps where market valuations are more "reasonable" and the regulatory environment for the companies "more stable."

Tadir-Gan, a maker of auto parts, closed 6.8% higher after it won a $45 million contract from Volkswagen. Another big gainer was Given Imaging, which extended its rally on a 6.3% increase Wednesday, three days after Japan approved use of its PillCam Colon device.
With reporting by Reuters.

David Bachar