Tel Aviv Stock Exchange Hits 18-month High After New Government Sworn In

Insurance stocks climb after Harel posts its best annual profits since 2009.

The Tel Aviv Stock Exchange greeted the new government Tuesday with its highest close in more than a year and a half, almost confirming departing Finance Minister Yuval Steinitz's remarks that he left the economy in better shape than when he took office.

The blue-chip TA-25 index was buoyed by insurance stocks to end 0.4% higher at 1,248.96 points, its highest level since July 2011. The broader TA-100 gained 0.6% to 1,111.86. Turnover topped NIS 1 billion.

The TA-Insurance index jumped 3.1% to 1,337.60, with all five companies posting strong gains: Phoenix 5.3%, Clal Insurance 4.1%, Menorah 3.4% and Migdal 2%. Harel, which advanced 2.8%, said its 2012 net profit climbed to NIS 448 million from NIS 218 million the year before, its best showing since 2009.

The TASE's performance provided a stark contrast to global markets for the second day running; shares in Europe and the United States extended the previous day's decline on continued concerns about Cyprus' economy.

A government spokesman said Cyprus' parliament was likely to reject plans agreed by euro zone officials over the weekend to part-fund a 10-billion-euro rescue of the island by seizing between 6.75% and 9.9% of bank deposits at Cypriot banks.

"This could be a flash in the pan, but it is a reminder to investors that the situation in Europe is not resolved. It could be the start of a spring correction, just as we saw in 2011 and 2012," Andrew Milligan, global head of strategy for Standard Life Investments in Edinburgh, said in a note.

London's FTSE 100 slipped 0.4% and Paris' CAC-40 dropped, 1.3% while Frankfurt's DAX fell 0.9%. MSCI's measure of global stock markets was off 0.5%. In the United States, the Dow Jones Industrial Average was down 0.36% at midday to 14,399.34.The euro fell 0.4%, hitting a session low against the dollar.

In local foreign currency trading, the dollar weakened about 0.3% to a Bank of Israel rate of NIS 3.6820, while the euro lost close to 0.2% to NIS 4.7665.

"The dollar-shekel rate is holding steady inside a range between its low of NIS 3.66 and approximate level of NIS 3.7. Only a breakout from inside this range will determine where it goes next," said currency trader FXCM. "An escalation of the Cyprus crisis is expected to increase demand for the dollar as a safe asset, which will also lead to a rise in the dollar-shekel rate."

Holding company Clal Biotechnology tumbled 5.6%, making it the biggest loser among TA-100 stocks for the session and bringing its decline over the past 12 months to 33%. The biotech investor said Tuesday it planned a NIS 200 million rights offering to support its development program. It also reported a narrowing of its fourth-quarter loss to NIS 12.3 million from NIS 90.2 million a year ago.

Among other big decliners, Ituran, which makes vehicle-location technology, fell 3.1%. Meanwhile, online translation company Babylon tumbled 3%, Compugen dropped 2.2% and Ceragon, a maker of wireless backhaul gear, fell 1.8%.

Mellanox, the semiconductor company, dropped 1.7% in heavy trading of NIS 36.2 million.

Among top gainers, real estate developer Airport City jumped 8.7%. Companies in Gershon Zelkind's group rallied, with Elco Holdings up 5.9%, Electra up 5.3% and Electra Consumer up 4.3%. Israel Chemicals led the most actives as NIS 57.1 million shares changed hands on a 1.6% rise.

Willi-Food, the food importer, rose 1.2% after the company said fourth-quarter net profit rose nearly six-fold to NIS 20.8 million while sales increased 30% to NIS 76.6 million.

With reporting by Reuters.

Oren Nachshon