Market Report / Wall Street Undercuts Early Gains on TASE

Compugen shares soar 40%, after reporting collaborative agreement with Bayer Health Care to develop cancer treatments.

Tel Aviv shares were tracking higher on Monday morning, in line with their Europe counterparts, before the trend was undercut by a lower Wall Street, which left the TA-25 index down for the day.

The benchmark index ended down 0.4% at 1,203.65 points, while the TA-100 lost a little more than 0.1% to 1,100.16. Turnover reached a fairly brisk NIS 983.4 million for the day. While U.S. and European stocks are at record levels, the mood in Tel Aviv remains somber.

"Trading on the TASE will tread water, as it has in the past few weeks," said Ron Shahar, chief investments manager at Alfa Platinum Investment Management. "After the release of U.S. unemployment data over the weekend and the meeting of the [U.S. Federal Reserve] Open Market Committee, we are looking for a reduced flow of capital to the markets. Therefore, we are continuing to recommend keeping relatively big cash weighing of 15% to 20% and small equities holding."

Stocks on Wall Street pulled back from record levels on Monday, while the dollar fell against the yen as investors weighed the likelihood of the Federal Reserve paring back its economic stimulus program. U.S. non-farm payrolls rose by 162,000 in July, more than 20,000 below a median market estimate.

Encouraging signs of growth in the global economy, however, gave the U.S. currency support and kept declines in U.S. and European equities in check. But the better-than-expected pick-up in the U.S. service sector pushed bond yields to near two-year highs.

The Dow Jones industrial average was down 0.4% at 15,600.29 in the early afternoon. The Standard & Poor's 500 was off 0.2% at 1,706.3 and the Nasdaq Composite Index 0.1% lower at 3,686.18. In Europe, the FTSE shares Eurofirst 300 provisionally closed up 0.1% at a two-month high, while the MSCI world equity index slipped 0.1%.

In foreign currency trading, the continued uncertainty about who will serve as the next Bank of Israel governor did little to undermine the shekel. The dollar weakened again by some 0.45% to a Bank of Israel rate of NIS 3.5610. The euro held steadier, losing just 0.07% to NIS 4.7256.

Compugen was the talk of the TASE on Monday, as the shares of the biotechnology company soared more than 60% before settling for a daily gain of 40.6%. The company reported on Monday it had signed a collaborative agreement with Bayer Health Care to develop cancer treatments in a deal that could yield the Israeli company more than $500 million.

Another big gainer, albeit less dramatic, was Bezeq, which finished the day up 1.7%. Israel's biggest telecommunications company not only beating analysts' forecasts with second-quarter profits of NIS 473 million but is also due to pay dividends totaling some NIS 1.4 billion for the three months.

Other big gainers in Monday's trading were biotech company Kamada, which advanced 5.3%. and Allot Communications, which added 6.4%.

Teva Pharmaceuticals ended down 0.65%. Morgan Stanley analyst David Risinger lowered his rating for the world's biggest maker of generic drugs to Underweight from Equal Weight and removed his target price of $40, citing the challenges Teva faces when its key Copaxone product begins facing generic competition.

Israel Chemicals resumed its descent on Monday, after briefly bumping higher the day before, losing 1.2% on turnover of NIS 93.8 million, the day's highest. The Israel Corporation, its parent company, fell an even sharper 2.4%.

Reuters contributed to this report.

AFP