Market Report / Stocks Lower on Gas Curbs and Fed Policy

Trading in Tel Aviv closed lower following Wednesday's announcement that the cabinet would be asked to limit natural gas exports to 40%.

Trading on the Tel Aviv Stock Exchange closed lower Thursday against
the backdrop of Wednesday's announcement that the cabinet will be asked to
approve new curbs to offshore natural gas exports and limit exports to 40%.

Investors also may have been affected by Wednesday's announcement by U.S.
Federal Reserve Chairman Ben Bernanke that the American central bank could cut
back on its bond purchases over the balance of the year and halt the practice
altogether next year.

The benchmark Tel Aviv-25 index closed off 1% Thursday at 1,211.77 while the broader Tel Aviv-100 declined a bit more by 1.1% to 1,087.80. The Banks-5 index slumped by 1.3% while the Real Estate-15 index declined by 1.4%.

Communications stocks were standouts on the down side. The Communications and Media index was off by 3.6%. The Oil and Gas index was down by 2.1% for the
day. Trading volume was NIS 1.34 billion as the first week of longer trading hours was wrapped up.

Shari Arison, the controlling shareholder of Bank Hapoalim, sold NIS 250 million worth of Hapoalim shares, the bank said Thursday. Arison owns 20.3% of Hapoalim through Arison Holdings and another 2.4% percent through Salt Industries. Salt, in a deal outside of the market, sold 14.6 million shares of the bank at NIS 17.1 a share, a discount on Wednesday's closing price of NIS 17.39. Hapoalim shares slumped Thursday by 2.7%, closing at NIS 16.93. Salt had owned 31.75 million shares. Some 65% of the banking company's shares are publicly traded.

Among stocks declining the most on Thursday's trade was Clal Industries,
which shed 10% of its value. Ratio Oil Exploration shares slumped by 7.1%
while Bezeq was down by 4.8%. Gainers for the day included Avgol Industries, a
fabric manufacturer, which was up 2.5% and Ituran Location and Control, the
vehicle tracking company, shares of which rose 2.1%. Beyond the leading stocks
in the Tel Aviv-100 index, Capital Point surged by 34%. Shares of Brainsway,
the medical technology firm, dropped by 7%, while another medical firm,
Icecure Medical, lost 34% of its value.

Switch at top for Nova

Nova Measuring Instruments, which is dual-listed on the Nasdaq and in
Tel Aviv, announced Thursday that its president and CEO, Gabi Seligsohn, has
decided to resign. He is to be succeeded by senior vice president Eitan
Oppenheim effective July 31. On Wednesday, the company's shares slumped about
9% in New York, but in Thursday's trading in Tel Aviv they declined by just
0.2%.

In other local business news, Ishai Davidi's FIMI fund completed its
acquisition of a 51% controlling share of Euro Global Overseas for NIS 106.5
million. The Israel Corporation's Zim Israel Navigation and Ze'evi Holdings
each have a stake in the company, which is in the shipping logistics and
container business.

There were declines in the value of index-linked government bonds Thursday,
with 10-year bonds slumping by 0.7% and shekel-denominated bonds with a
10-year redemption declining by 0.6%.

"After the announcement [Wednesday] by the Federal Reserve chairman, it looks
like a decline in bond purchases will already begin in the short term and will
be reflected in increased bond yields in the United States, which is expected
to influence long-term debt in Israel and also lead to a strengthening of the
dollar against the basket of currencies," said Eyal Segal, co-CEO at the
Tachlit investment firm. "The dollar is expected accordingly also to
strengthen against the shekel and natural gas royalties [from Israel's
offshore gas reserves] will not offset this because the Bank of Israel has
announced that it will offset the dollar revenues by buying foreign currency."

In midday currency trading in the United States Thursday, the dollar rallied
to two-week highs against major currencies and looked set to extend gains
after the Federal Reserve signaled it would begin withdrawing its stimulus
programs. Stronger-than-expected data on factory activity in the U.S.
mid-Atlantic region and in home resales added to the dollar's momentum,
overshadowing an earlier report showing a rise in weekly jobless claims.

With reporting by Reuters. 

Albatross