Tel Aviv stocks are cutting sharp morning losses in anticipation of gains on Nasdaq today.

The pessimism that ruled the session until noon followed reports this morning of hostilities breaking out on Israel's northern border with Lebanon. Rockets were fired from Lebanese territory at Israeli soldiers, on top of continuing hostilities between Israelis and Palestinians in the West Bank.

Israel's leaders have been sounding increasingly pessimistic although Prime Minister Ehud Barak denies that he yesterday ordered the Israeli army to prepare for all-out war. He clarified that he had told the army to step up preparations a full three months ago. Investors apparently did not find his clarification enough cause for cheer.

The Maof-25 index of blue chips is off down 2.2% to 473.5 points, although earlier losses neared 4%. The TA-100 index is losing 2.5% to 457 points. The Tel-Tech technology index is falling by 4.6%. Total turnover is relatively high at 200 million.

Teva Pharmaceuticals (Nasdaq:TEVA) is sinking off 6% on the session's highest volume, NIS 48 million. Yesterday Teva shares lost 10% in New York. Investors are apparently unhappy about the announcement released yesterday by Toronto, Canada-based pharmaceuticals company Biovail (Toronto:BVF.TO) that its 2001 sales of generic drugs will fall up to 25% short of forecasts. Biovail has a profit-sharing arrangement with Teva on certain hypertension and angina treatments. Biovail produces the drugs, including generic versions of Adalat, Procardia and Aventis, and Teva markets them in the United States. Teva was quick to announce that its sales will not be affected by Biovail's revenues shortfall, and that it does not plan to issue a profit warning. Teva CFO Dan Suesskind said that Teva's sales forecast remains unchanged.

Formula Systems (Nasdaq:FORTY) is down 2.5% on lively trade, after the TASE this morning announced that Formula's subsidiary Mashov Computers will be delisted from the TA-100 index following Formula's tender offer to acquire the public's holdings in Mashov. Mashov will be delisted on January 7. Another company will come in its stead when the index is next updated on February 1. Mashov shares are rising 0.2% to NIS 8.8, about the level of Formula's tender price of NIS 9 per Mashov share.

Nice Systems (Nasdaq:NICE) is sinking by 17% after losing 16.5% on Nasdaq on Tuesday. Nice shares have lost an aggregate of 63% as of last week, when the company released a profit warning for the fourth quarter of 2000.

PCB is slipping 9% on live trade after its subsidiary

Camtek

(Nasdaq:CAMT) lost 13% on Nasdaq yesterday.