Tel Aviv stocks are sustaining late-morning drops, and are off 1.9% Wednesday afternoon. Stocks opened with 2.5% drops in response to reports of treasury plans for a tax on capital gains. The falls were moderated some later inteh morning by Maof speculators attempting to boost the index for options expiry.

Finance Ministry Director General Ohad Marani on Monday hinted on Israel Radio that the ministry may impose a capital gains tax as part of the emergency economic plan. It has also been leaked that the Rabinovich tax reform committee is planning to recommend imposing 15% to 25% tax on capital gains from the stock exchange and savings plans.

The negative mood is also attributed to a potential sharp hike in lending rates, and to continuing sharp drops on Wall Street where Nasdaq dropped 1.6% and Dow Jones closed off 0.5% Tuesday.

The Maof-25 blue chip index, the TA-100 index, and the Tel-Tech technology index are each off 1.9%. Total turnover is a moderate NIS 105 million.

Meanwhile, the dollar is mildly off from earlier highs against the shekel, which peaked at NIS 4.855, and is now trading at NIS 4.848, still up from Tuesday's representative exchange rate, NIS 4.7870.

Market players attributed the slight recovery in leading indices to Maof speculators' attempts to support the index ahead of the expiry of April options tomorrow. Dealers said speculators are currently making the best of the relatively low volumes of trade, and of actions by few players. All this is allowing them to moderate the losses, dealers believe.

Drug giant Teva Pharmaceuticals (Nasdaq:TEVA) is down 0.8% on 1.2% negative arbitrage spread, attracting the session's biggest volume, NIS 27 million. Yesterday, Teva said its relapsing-remitting multiple sclerosis treatment, Copaxone, is now available in "pre-filled, ready-to-use syringe." In addition, Teva was rated a Buy by investment bank Nessuah Zannex. Analyst Haim Israel restated his $79.5 price target, 44% above market. The analyst estimates that Teva will post 45% growth in Q1, and $79.4 million net profit.

Tower Semiconductor (Nasdaq:TSEM) is down 2.3%. The company announced that it has received another $41 million from strategic partners to its Fab 2 plant. Bank shares are sliding, with Bank Hapoalim off 2% on NIS 11 million volume, Bank Leumi down 2.7%, and Bank Discount off 2.2%. It was reported today that debt-burdened cable TV firm Tevel is likely to ask the banks to write off debt of hundreds of millions of shekels. In 2001, the banks made provisions worth hundreds of millions of shekels for the communications sector. On Tuesday, Tel Aviv District Court granted Tevel a two-month stay of liquidation proceedings.

IDB group stocks are widening earlier losses. IDB Holding Corporation is down 3%, IDB Development Corporation is off 3%, while subsidiaries Clal Industries is down 3.3%, and Discount Investments is down 4.7%. TheMarker today reported that Tevel's lenders informed Discount Investments that they don't intend to write off any of the beleaguered cable company's loans. The banks told Discount Investments that unless IDB injects money into Tevel, the banks will demand a receiver-operator for Tevel.

Discount Investments announced today it is in talks to sell its entire ownership of Albar Mimunit Services, which provides vehicle-financing services, vehicle leasing and fleet management services.