Market Report / Technology Shares, Teva Pull TASE Higher

Gains by Teva and tech stocks on Wall Street lifted the TASE with help from the shekel, which appreciated against the dollar on surprise news from the Bank of Israel.

Technology shares and Teva Pharmaceuticals paced the Tel Aviv Stock Exchange higher on Thursday, lifted by better-than-expected earnings from tech shares on Wall Street and the dollar's gains on the shekel.

The benchmark TA-25 Index finished at 1,215.76 points, a gain of 0.9% for the day, bringing its advance for the Shavuot holiday-shortened week to about 1% as turnover reached NIS 1.32 billion for the day. The broader TA-100 Index advanced 1.1% to 1,089.06, finishing 1.3% higher for the week.

In the bond market, the government's 10-year shekel bonds rose 0.36%, cutting the yield to 3.46%, a historic low. The treasury's 10-year inflation-linked bond advanced 0.6% to a yield of 1.39%.

Traders were celebrating Bank of Israel Governor Stanley Fischer's surprise decision Monday to lower the base lending rate by a quarter of a point to 1.5% and to commit the bank to buying $2.1 billion in offering currency this year to offset the effects of Tamar natural gas field on the balance of payments.

The two steps have so far succeeded in the dollar strengthening. On Thursday, the U.S. currency made a further gain on the shekel, appreciating 0.25% to a Bank of Israel rate of NIS 3.6470. The euro, however, lost close to 0.7% against the shekel to NIS 4.6970. A weaker shekel promises to improve the competitiveness and profitability of exports like Teva and high-tech companies.

"We believe that for now, until Governor Fischer steps down, the Bank of Israel is likely to continue its aggressive policy of stopping the shekel's appreciation," said Yossi Fraiman of Prico Risk Management & Investments. "The dollar's strengthening globally is also contributing to the shekels weakness and has reduced the need for the Bank of Israel and the treasury to act. But the market is likely to challenge the Bank of Israel in the not too distant future."

He predicted the test would come after Fischer leaves office at the end of June and a new governor takes over.

Teva rose 4.2% on the TASE and was the day's most heavily traded share, with NIS 149.7 million changing hands. Technology stocks rallied, with the TA- BlueTech 50 up 2.3% to 303.74.

Allot Communications, a maker of cellular backhaul gear, paced all TA-100 shares, with a 7.1% gain for the day. Kamada jumped 6.7% after it announced on Thursday a series of new developments, among them an expanded agreement with Baxter Laboratories that will expand its revenue from the accord by $55 million in the 2010-2016 period to a minimum of $165 million. LivePerson rose 3.9% by the end of trading.

Mellanox Technologies rose 6.1% after it said on Wednesday that it had agreed to buy the closely held California company Kotura for $82 million, giving it access to silicon photonics technology it needs to develop higher-speed next-generation network products.

Tech stocks were also given a boost by Wall Street, where Cisco earnings led stocks higher on Thursday – trumping concerns about the latest U.S. economics data. They showed the biggest jump in weekly initial jobless claims since November and a housing slide in April, falling sharply below analysts' expectations. Meanwhile business activity in the U.S. mid-Atlantic region contracted in May, according to data from the Federal Reserve Bank of Philadelphia.

The Standard & Poor's 500 Indexinched up 0.01%to 1,658.88, while theNasdaq Composite indexrose 0.3% to 3,480.96 in early afternoon New York time.

European shares ended a touch lower on Thursday, pegged back by downbeat earnings news and U.S. data. The FTSEurofirst 300 closed down 0.21 points at 1,245.45, with heavyweight Swiss insurer Zurich off 3.3% after a 7 % drop in first-quarter net profit.

On the TASE, there were losers, too. Cellphone companies Cellcom Israel and Partner Communications lost 3.7% and 2.45%, respectively, extending their losses from Monday, when Cellcom reported disappointing first-quarter results.

Brainsway, a medical electronics company specializing in treatments for depression, dropped 3.1% to NIS 62.69 at close. The company said on Thursday it had privately placed some NIS 23 million in shares at NIS 60 a piece, a 7% discount on the company's opening price.

With reporting by Reuters.

Bloomberg