Market Report / Dollar Creeping Up Against Shekel, TASE Rises With Teva Leading the Way

Benchmark TA-25 index finished at 1,237.21 points, a gain of 0.4%, while the TA-100 added 0.3% to end at 1,111.89 on turnover of just over NIS 1 billion.

Israeli shares advanced modestly for a second day, with Teva Pharmaceuticals and telecommunications shares pacing the advance.

The benchmark TA-25 index finished at 1,237.21 points, a gain of 0.4%, while the TA-100 added 0.3% to end at 1,111.89 on turnover of just over NIS 1 billion. Telecom shares rose, led by Partner Communications on a 2% advance, with Bezeq trailing on a more modest 0.7% rise but in heavy trading of NIS 34 million.

Teva was up 1.1% and was the second most active stock of the day, with NIS 56.3 million shares changing hands. Bloomberg News said the company stands to benefit from a U.S. Food and Drug Administration recommendation that restrictions on GlaxoSmithKline's diabetes pill, Avandia, should be eased. Teva should be able to piggyback on any easing after the FDA approved its generic version of Avandia in January.

The volume leader was Israel Chemicals, which ended almost unchanged on turnover of NIS 14.67 million.

The TASE on Monday announced after the close of trading revisions to the key indices, which go into effect June 16. For the TA-25 index, First International Bank of Israel and Migdal Insurance will join while two semiconductor companies – Mellanox and EZchip – will be exiting. Mellanox plans to delist from the TASE altogether in August.

The dollar bounced higher, but Wall Street was little changed, after the ratings agency Standard & Poor's dropped its negative credit outlook for U.S. government debt on Monday. S&P raised its U.S. sovereign credit outlook to "stable" from "negative," and put the likelihood of a near-term downgrade of the rating at "less than one in three." The agency had downgraded the United States to AA+ from the top-rated AAA in the summer of 2011.

However, the good news from S&P was offset by uncertainty over the Federal Reserve's next move on its monetary policy. In New York, the Standard & Poor's 500 Index was off 0.8% to 1,642.04, while the Nasdaq Composite Index added less than 0.1%, to 3,471.44. The FTSEurofirst 300 index of top European shares provisionally closed 0.1% lower at 1,193.58, following a 1.3% bounce on Friday.

The dollar rose as high as 99.28 yen and last traded at 99.22, up 1.7% on the day, according to Reuters data. Against the euro, the dollar gained about 0.2% to 1.3192. Against the shekel, the dollar also squeezed out some gains, appreciating 0.08% to a Bank of Israel rate of NIS 3.6320. The euro lost 0.13% against the shekel to NIS 4.7978.

The dollar weakened sharply on Friday, prompting the Bank of Israel to intervene, but Yossi Fraiman, CEO of Prico Risk Management & Investments, said the trend now favored the greenback.

"Good economic data released in Japan alongside reports on tax cuts are supporting a stronger dollar against the main currencies," he said. "Locally, as we predicted, the shekel strengthened to NIS 3.62 to the dollar and even a little more than this. However, we believe that this trend is nearing its end and that the shekel in the short term will weaken to over NIS 3.65 to the dollar."

In TASE trading, Babylon led TA-100 shares higher, advancing 3.7%. Collplant, which is developing technology in regenerative medicine, rose 9.5% after it reported Monday that its patent covering core creating functional collagen from plants was registered in the United States. Oil Refineries rose 2.7%

IDB Holding Corporation, which rallied on Sunday after a court gave the controlling shareholder more time to get his finances in order, retreated by 4.7% on Monday amid concerns about what kind of price it can get for selling its stake in Clal Insurance. The court gave IDB until August 22 to sell its stake in the insurer. Clal Insurance ended down 1.8%.

TowerJazz led TA-100 shares lower, shedding 2.9%. The semiconductor company is making a rights offering through June 12 with the aim of raising $60 million. The stock is due to go ex-rights June 13. Other losers in the session include oil explorer Ratio, which lost 1.7%, and insurer Phoenix, which fell 1%.

Reuters contributed to this report.