Israel Stocks Extend Rally as Traders Weigh Iran; Saudi Gains

Israel's benchmark stock index advanced for a seventh day, tracking gains in U.S. shares last week, as investors weighed Iran's nuclear accord with world powers and lower borrowing costs. Saudi shares rose.

The TA-25 Index (TA-25) increased as much as 0.7 percent to 1,354.53, the highest intraday level on record. The index, which closed at a record on Nov. 21, was at 1,352.67 at 12:54 p.m. in Tel Aviv. Teva Pharmaceutical Industries Ltd., the world's largest generic drug maker, rose 1.3 percent, while Bank Leumi Le-Israel Ltd. climbed to the highest in more than two years. The Tadawul All Share Index gained 0.5 percent.

U.S. stocks rose for a seventh week, sending the Dow Jones Industrial Average to the longest stretch of gains in almost three years, as improved data on employment and retail sales offset concern over a cut in monetary stimulus. The Bank of Israel, which will decide on interest rates tomorrow, has reduced the key borrowing costs to 1 percent from 3.25 percent since 2011 to spur the export-driven economy.

"The market is rising on momentum fueled by what's happening in the world and low local interest rates," Idan Azoulay, managing director at Tel Aviv-based Epsilon Investments, which manages the equivalent of about $2 billion, said by phone. "Iran is not a factor in trading today."

'Historic Mistake'

Iran and world powers struck an accord today that broke a decade-long diplomatic stalemate, setting limits on the Islamic Republic's nuclear program in exchange for relief from sanctions. Israeli Prime Minister Benjamin Netanyahu told the cabinet that the deal is a "historic mistake."

"Everyone was expecting an agreement with Iran," Steven Shein, a trader at Psagot Investment House Ltd. in Tel Aviv, said today by phone. "Further impact over the Iran deal will play out over coming weeks."

Israel's benchmark stock index has risen 14 percent this year compared with a 21 percent gain in the MSCI World Index and a 27 percent advance in the S&P 500 Index. Teva rose 1.3 percent to 144.5 shekels. Bank Leumi, the country's second-largest lender by assets, increased 1.3 percent to 14.11 shekels, poised for the highest since August 2011.

Twenty of 23 analysts surveyed by Bloomberg expect the Bank of Israel to hold the rate at 1 percent. The yield on the government's 4.25 percent benchmark bond due 2023 fell four basis points, or 0.04 percentage point, to 3.58 percent.

Saudi Gains

Saudi Arabia's benchmark climbed the most since Nov. 17 to 8,381.80 as Saudi Basic Industries Corp., the world's second-biggest chemicals maker, rose 1.6 percent. The Bloomberg GCC 200 Index of Gulf shares, Kuwait's gauge and Qatar's advanced 0.4 percent.

"The Iran deal is very good as it will benefit the GCC economies in the long term," Tariq Qaqish, who oversees about 500 million dirhams ($136 million) as head of asset management at Dubai-based Al Mal Capital PSC, said by phone today. "It will enhance the trade between the Gulf and Iran."

The Strait of Hormuz, the waterway through which about 20 percent of the world's oil is shipped, separates Iran from six-member Gulf Cooperation Council countries, including Saudi Arabia. The agreement is the first to be reached since Iran's atomic energy work came under international scrutiny in 2003. The country's automotive and petrochemical industries will benefit from the eased sanctions.

The two sides now aim to conclude a comprehensive accord within six months. Western nations have accused Iran of harboring nuclear-weapons ambitions, a charge it denies. The U.S. and Israel have said they are willing to use force if needed to prevent that from happening.

Dubai's benchmark index, up 77 percent this year, lost 0.5 percent, while Abu Dhabi's ADX General Index declined 0.3 percent. Bahrain's measure dropped 0.3 percent and Oman's MSM30 fell 0.1 percent.