Stocks Rise on pre-Christmas Geniality

Tel Aviv stocks gained ground yesterday, if not much of it, as European stocks ambled up to their highest point in more than two years boosted by pre-Christmas cheer. Asian stocks finished the day below water, however.

Israeli shares began the session under the flatline, spent the morning meandering just above it, then suddenly gained momentum in the afternoon to close with modest gains of half a percent. Actually, the FTSEurofirst 300 didn't gain any more than that, but there was one big difference between the situation in Israel and in Europe. While the weather here has turned balmy again after the winter's one storm, over there investors sent energy stocks climbing as the continent froze. Also, mining shares were lifted by buoyant metals prices.

Oil gained ground as world investors took a respite from their pessimism, possibly in honor of the approaching Christmas festivities.

Over in the forex scene, the euro fell against the dollar and hit a record low versus the Swiss franc. Observers think the euro could weaken even more as markets quake at the thought of more credit rating downgrades of debt-stricken euro-zone countries and banks.

Here at home, the benchmark TA-25 index gained 0.5% to close at 1,315 points and the broader TA-100 index advanced 0.6% to close at 1,215 points. The banks inched down and real estate stocks inched up.

Meanwhile, inflation expectations derived from the bond market rose to their highest level in a decade, 3.2%. The Bank of Israel is supposed to keep inflation within a range of 1% to 3%, which is the price stability target range set by government. According to inflation expectations, there's a problem. Actually inflation expectations among market animals have been trending upward for a long time, from 0.6% in January 2009. Part of the reason is the steady upward creep, sometimes wild upward rush, by commodity prices in world markets.

Shares of defense electronics maker Elbit Systems gained 1% as the company reported a deal selling advanced equipment to the Polish army. For more on that, see Page 8.

The liveliest stock on the floor was Bezeq, shares of which shot up 4.2% on huge turnover of a quarter-billion shekels, lifting the company's market capitalization to NIS 28.5 billion. Why? See Page 8, but briefly, Clal Finance said the phone company is its favorite of the entire telecoms pack, including the mobile operators. Of those, Cellcom is the favorite. Bezeq is expected to carry out a second capital reduction and to pay its shareholders a massive dividend, assuming shareholders and the court approve the idea. They may not.

The second highest turnover of the day was potash producer Israel Chemicals, which advanced 1% after turbulent trading on turnover of NIS 114 million, and third came drugs behemoth Teva Pharmaceutical Industries, which retreated against the trend by 0.6% on turnover of NIS 110 million.

Magic Software gained 4.3%, in stark contrast to the debacle on Wall Street after the company announced intentions to make a private placement of stock at a handsome discount. There, the share lost nearly 11% last night.