Tel Aviv stocks retreat Tuesday on weak shekel, expected escalation after Gaza attack

Speculators are holding up TASE, say pessimists; it's the strong shekel and budget cuts, say optimists
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Tel Aviv stocks retreated Tuesday on fears of military escalation, after Israel's mission to Gaza on Monday night, and on the weakening shekel.

Israeli forces killed 11 people in air force strikes, including children and apparently including Hamas military leader Salah Shehada, who headed the Izz el-Deen al-Qassam brigades. The brigades are responsible for numerous terror attacks on Israelis.

As the ripples from the Gaza attack spread, including condemnation from UN Secretary General Kofi Annan over its civilian casualties, Israeli stocks joined the rest of the world's exchanges in the red.

The negative sentiment worsened as the session wore on. The Maof-25 finished down 1.8% at 377.9 points and the Tel Aviv-100 index lost 1.6% to 362 points. Tech stocks fell by a lesser 1%.

Israeli stocks have been resilient, compared with other exchanges around the world, but there is no consensus on why. Optimists attribute the strength to the shekel's rising against the dollar, to the Finance Ministry's seriousness about budget cuts, and to the compromise reached on turnover tax. Pessimists say the strength will end the moment options on the Maof-25 index expire, at the end of the week. Speculators are the ones holding up the market, they say.

Be that as it may, Teva Pharmaceuticals (Nasdaq:TEVA) is the liveliest share on the floor, as usual. It lost 1.9% on high turnover of NIS 57.4 million despite announcing that the U.S. Food and Drug Administration granted "approvable" status for Teva's ANDA for Gabapentin Capsules 100mg, 300mg and 400mg. Gabapentin Capsules are the generic equivalent of Pfizer's anticonvulsant, Neurontin. The brand product has annual sales of approximately $1.3 billion, Teva said.

Leader & Co analyst Ori Hershkovitz said today that a study over 7 quarters shows: anybody who buys Teva stock five days before its quarterly statement, and sells it five days after the statement, beats the S&P index by 10%.

Nessuah Zannex chief analyst Haim Israel said that Teva is not expensive compared with peers, when its speed of growth is factored in.

Teva shares have lost 8% so far this month, on general negative sentiment for drug companies sparked by alleged misbehavior by Merck, Elan and others.

Lipman yesterday surged on news that First Israel Mezzanine Investors will be buying 19% of the company's equity from Lipman's founders, for NIS 150 million. Almost half that sum will be spent on convertible bonds. Today Lipman started up 0.7% and ended down 1.9% on high turnover, relatively speaking, of NIS 1.8 million.

Partner Communications (Nasdaq, TASE:PTNR, LSE:PCCD) inched down by less than 0.1% yesterday but did so on high turnover of NIS 7 million. It attracted attention today too, finishing down just below the flatline on NIS 3.9 million turnover.