Key Tel Aviv share indices closed about 2% higher on Sunday, with the blue-chip index touching a record high, after an Israeli pre-emptive strike against Hezbollah curbed a potential rocket barrage by the group against key targets in Israel.
The blue-chip Tel Aviv 35 index ended 2% higher at 2091.6 points, after hitting an intraday peak of 2091.91, while the broader TA-125 rose 2.1%.
"The trading day began after the publication of the extensive pre-emptive strike launched by the Air Force early in the morning, which prevented the launch of missiles towards strategic targets in Israel," said Yuval Tzuk, an economist in the bourse's research department.
He said share gains were also helped by growing expectations of US interest rate cuts.
Israel's pre-emptive attack
Hezbollah launched hundreds of rockets and drones at Israel early on Sunday, as Israel's military said it struck Lebanon with around 100 jets to thwart a larger attack, in one of the biggest clashes in more than 10 months of border warfare.
Israel's foreign minister said the country did not seek a full-scale war, but Prime Minister Benjamin Netanyahu warned: "This is not the end of the story."