Tel Aviv stocks closed up 5.6% Sunday ahead of sharp cut in interest rates

Elbit Medical gained 6.4% after announcing General Electric is investing $10m in InSightec
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Tel Aviv stocks closed with sharp gains of 5.6% on Sunday in anticipation of the 2% interest rate cut promised by the Bank of Israel.

The rate cut is expected to be announced this evening, after the central bank reached a comprehensive accord with Prime Minister Ariel Sharon over the weekend.

Traders also attributed the positive mood to Friday gains on Wall Street, when the Nasdaq climbed 1.4% and the Dow Jones closed up 0.5%. Total turnover was high at NIS 553 million.

Market players said that the lively action and sharp gains may indicate that the market is heading toward a real turning point. They emphasized that leading indices are posting gains even though speculators on the Maof index currently hold big stock volumes and would probably try to manipulate the index to lower levels ahead of options for December expiring this Thursday.

The players estimated that gains are likely to intensify after the options expiry. They based this on the public turning to invest in the stock exchange now that other investment instruments have become less attractive.

The Maof-25 index of blue chips rose by 5.6% to 435.2 points and the TA-100 index climbed 6% to 420.0 points. Tech stocks closed with 7.4% gains.

Stocks gained 3.5% at opening and the gains intensified as trade wore on. Blue chips were gaining between 4% to 5% most of the session, but gained more ground toward closing.

HSBC economists upgraded the Israeli capital market from Underperform to a Neutral rating.

Elbit Medical Imaging (Nasdaq:EMITF) closed up 6.4% on NIS 3 million volume of trade. The firm announced that General Electric (NYSE:GE) is to invest $10 million in its subsidiary InSightec, based on a company value of $85 million. InSightec has developed a noninvasive technology for treating benign and cancerous growths.

Teva Pharmaceuticals (Nasdaq:TEVA) rose by 4.3% on hefty turnover of NIS 51 million. Teva opened with a negative arbitrage spread of 2.9%. IDB Holding Corporation jumped 7.1% on NIS 9 million turnover following reports on a structural change in the IDB-Kardan deal. The Australian Lowy family and investment house Kardan are establishing an investment company that will acquire the 23.6% controlling stake in the IDB group in return for $315 million. The Lowy family is to invest via LFG Holdings, and is to own 29.9% in the new holdings firm. The remaining stake will be owned by Kardan.

This comes to facilitate the completion of the IDB-Kardan deal, and in effect doubles the amount that the Lowy family is to invest in IDB Holding Corporation shares. The Lowy family will be investing $95 million in the IDB Holding Corporation.

Kardan climbed 7.7%, IDB Development Corporation gained 5.5% and Discount Investments closed up 7.4%.

Bank Hapoalim gained 6.2% on the sessions' biggest turnover, NIS 62 million. On Thursday, Bank Hapoalim posted the biggest turnover in the session, NIS 31 million, and closed up 2.7%. The gains were generated by the bank announcing a sweeping efficiency plan.

Pharmaceuticals firm Agis Industries closed up 0.4% on NIS 8 million volume of trade. The firm announced that it has received the approval of the U.S. Food and Drug Administration for a new generic drug. This means that its American subsidiary Clay-Park Labs has successfully passed the FDA inspection of its New York plants. Agis said that given the expected rise of its R&D costs in 2002, and additional erosion in profitability from sales in the local market, it could fail to post profit in 2002.

Clal Insurance rose by 6.7% on NIS 12 million turnover. The company announced it is negotiating to acquire investment house Ilanot Batucha from IDB Holding Corporation and Discount Investments. The company also said that it is in talks to acquire investment house Evergreen Investments andManagement from Evergreen Capital Markets.

Real estate companies posted sharp gains. Housing and Construction climbed 10.7% on unusual turnover of NIS 10 million. Industrial Building Corporation closed up 8.5% on NIS 2.5 million turnover. Azorim gained 9.4% on NIS 9 million turnover. Market players estimate that this sector will benefit from the significant interest rate cut, which will decrease financing costs. In addition, the revenue of real estate companies is expected to grow as a result of the rise of the dollar against the shekel.

Elbit Systems (Nasdaq:ESLT) gained 5.4%, Koor Industries (NYSE:KOR) climbed 5.8%, Delta Industries (Nasdaq:DELT) climbed 9.4%. Partner Communications (Nasdaq, TASE:PTNR, LSE:PCCD) closed off 0.7% on NIS 7.5 million turnover. Partner opened with a negative arbitrage spread of 1.5%.

Phone company Bezeq gained 6.6% on over NIS 35 million turnover, and Bank Leumi closed up 5.7% on some NIS 35 million turnover. Clal Industries gained 6.7%.