Market Report / Stocks Mixed; Dollar Sinks Below NIS 3.59

Dollar trades below psychological barrier of NIS 3.60 a day before Tisha B'Av break.

Tel Aviv shares ended mostly higher on Monday, a day before its Tisha B'Av break, even as the benchmark TA-25 index ended virtually unchanged, weighed down by declining energy stocks. The dollar, meanwhile, sunk below the psychological barrier of NIS 3.60.

The TA-25 blue chip index edged down 0.05% to close at 1,220.44 points, but the broader TA-100 ended ahead 0.2% to 1,103.47, as turnover was a brisk NIS 1.29 billion.

But the more interesting development occurred in foreign currency trading, where the dollar lost nearly 0.3% to a Bank of Israel rate of NIS 3.5970, although it recovered slightly in late trading. The euro weakened 0.42% to NIS 4.6849.

Currency trader FXCM attributed the dollar's sharp drop - a week ago it broke above NIS 3.65 - to U.S. Federal Reserve Chairman Ben Bernanke's remarks last week that a highly accommodating monetary policy would be needed for the foreseeable future. Referring the NIS 3.60 level, FXCM said: "This is the bottom of the range in which the exchange rate has been trapped in the recent period. Its breakthrough is likely to accelerate its drop further below its previous bottom in June of NIS 3.573.

"In the transition period between governors, the Bank of Israel isn't a player in the local forex market, so the risk is growing of a continued sharp depreciation of the dollar-shekel, if, as it appears to be, the dollar's weakness continues," FXCM said.

Wall Street stocks edged up on Monday after hitting record highs in the previous session, as mixed U.S. economic data offset rosy earnings from Citigroup. In early afternoon trading, the Standard & Poor's 500 Index and Nasdaq Composite Index were both up 0.1% at 1,681.94 and 1,605.18, respectively.The pan-European FTSEurofirst 300 index closed up 0.4% at 1,199.92.

In TASE equities, trading insurance shares rose sharply, with the TA-Insurance index ahead 2.3% at 1,409.63. The big five companies all posted strong gains, with Menorah up 3.1% and Clal Insurance up 2.8%, leading the rises.

Bezeq led the most actives by a wide margin, with NIS 186 million in shares changing hands, but the stock ended unchanged for the day. Mivtah Shair extended a 3.9% advance Sunday by adding another 6.9%, making it the top gainer among TA-100 stocks for the day. Given Imaging rose 4.3% after the camera-in-a-pill maker received Japanese regulatory approval for its PillCam Colon video capsule for diagnosis of colonic disease when colonoscopy is required but difficult to conduct.

TowerJazz rose a modest 0.6% even after it reported on Monday that it had reached a seven-year accord with International Rectifier Corporation under which the Israeli chipmaker will manufacture multiple products for IR. A market source who asked not to be named told Reuters the deal would bring in revenue of up to $70 million a year to TowerJazz starting in 2014.

Reuters contributed to this report.