Market Report / Tel Aviv Stocks Tread Water


The Tel Aviv Stock Exchange stayed in a holding pattern yesterday as it awaited the Bank of Israel's interest rate decision today and Wall Street's response to better-than-expected economic-growth figures from the United States over the weekend.

The TA-25 blue-chip index edged down 0.1% to 1,208.41 points, with the TA-100 falling 0.2% to 1,072.04. The TA-Banking shed 0.3% to 1,1098.19 while the Oil and Gas index fell 0.2% to 1,121.85. Turnover was a tepid NIS 576 million.

The consensus among economists is that the central bank will hold its base lending rate at 2.25% for November. They cite faster-than-expected economic growth this year at about 3.5%., with recent figures showing strong retail sales and merchandise exports to buttress the outlook. The growing budget deficit also acts against a rate cut. Signs of an overheating housing mortgage favor a rate rise, but economists said the Bank of Israel is likely to impose a new round a restrictions on mortgages instead.

In the United States, the Commerce Department reported on Friday that U.S. gross domestic product expanded at a 2.0% annual rate. That follows 1.3% growth in the second quarter, and was just a tick above the 1.9% estimate of analysts polled by Reuters.

Still, the positive data might not be enough to stem a recent slide in the market, which has seen the S&P drop 3.7% from near five-year highs on September 14.

"The fact that this was a 2% GDP number is still pathetic in the overall scheme of life - we ought to be growing at 4%, not 2%," said Phil Orlando, chief equity market strategist at Federated Investors in New York.

In Israel, computer translation company Babylon rose 4.5% yesterday on news that one of its biggest investors, Reed Elsevier Ventures, is urging controlling shareholder Noam Lanir to delist the company instead of going ahead with a U.S. offering.

Modiin Energy advanced 6.9% and ILDC Energy gained 6.3%, the two partners in the failed Myra and Sara gas drillings. Their shares have plummeted more than 80% in recent months but the two companies still hold licenses for oil and gas exploration in Israel's Mediterranean waters.

In the bond market, the Tel Bond 20, 40 and 60 indexes rose as much as 0.1%. IDB Holding Corporation's Series Gimmel bonds advanced as much as 4.3% on a recovery in the share prices for some of its leading holdings. In addition, yesterday saw the sale of its Clal Insurance unit's Guard subsidiary in the United States for NIS 865 million. The proceeds will be sued to repay debt. IDB Holding shares finished 2.5% higher.

Shares of Patrner Communications rose 1.2% despite question marks about Israeli-American media mogul Haim Saban's offer to buy Scailex's controlling stake. Saban has sought $200 million in financing for the deal from Deutsche Bank, but talks about loans from Bank Leumi and Bank Hapoalim have not yet yielded an agreement. Ilan Ben-Dov's Scailex, which badly needs to sell its Partner stake to raise cash, eased 0.3%.

Teva Pharmaceutical Industries declined 0.3%. The U.S. Food and Drug Administration on Friday approved a new leukemia treatment by Teva to be sold under the brand name Synribo.

Reuters and Ram Ozeri contributed to this report.