TEL AVIV (MarketWatch) — Israeli stocks jumped on Tuesday, with all major equity sectors in the green as the benchmark index pushed within a hairbreadth of its record closing high.

Leading the broad-based charge were Israel Chemicals, the energy stocks and real estate firms. Even the banks traded higher in the face of an analyst-rating cut.

Within the technology and biotech benchmark indexes, Prolor Biotech shares leaped on a positive regulatory development.

At the close, the Tel Aviv Stock Exchange’s benchmark TA-25 Index advanced 1.1% to 1,236.83, while the TA-100 Index (TA100) climbed 1.1% to 1139.03.

Earlier Tuesday, the TA-25 moved as high as 1,237.15; the all-time closing high is 1,237.85, set April 6.

The Tel-Tech 15 Index of top technology issues also gained, up 0.9% to 234.19.

And the Real Estate 15 Index added 2% to 320.90.

The most-active issue on the TASE was fertilizer producer Israel Chemicals, trading up 2.1%.

Local analysts here noted that Mosaic Co. MOS, +1.61% , the Plymouth, Minn., company that’s an ICL peer, reported late Monday first-quarter net income that came up short of expectations. Profit nearly tripled to 67 cents a share from 23 cents a year earlier.

Leader Capital Markets emphasized that Mosaic “reported significantly stronger-than-expected potash volume” and is “seeing strong demand for potash.”

“Mosaic also confirmed, as seen in Israel Chemicals’ results, that inventories are lower at all potash producers,” the investment bank said in a note.

Makhteshim-Agan MAIXY, which specializes in crop-protection chemicals, saw its shares add 1.1%.

‘Heated debate’ over natural gas

Meanwhile, the Israeli partners in a natural-gas discovery off the coast of northern Israel rallied.

Shares of Avner moved up 2.8%, Delek Drilling advanced 3%, and Ratio Oil was up 2.3%. Delek Group DGRLY, +4.78% , parent of Avner and Delek Drilling, jumped 3.5%.

The gains came as there was a “heated debate” televised over whether Israel’s government should boost the royalties it will receive from the gas discovery, Leader Capital Markets said in a separate note.

Yitzhak Tshuva, the key shareholder within Delek Group, “spoke vehemently against further taxation and higher royalties,” Leader said. And Noble Energy NBL, +0.35% , which leads the gas consortium, “threatened to appeal to the [International Court of Justice] if the terms change.”

Read Amotz Asa-El’s View From Jerusalem column on how the newly found gas discovery could jeopardize Israel’s knowledge economy.

Inflation, The Enemy Of Cash?

Oil Refineries Ltd. shares rose 2.1% as Psagot Investment House reiterated a buy rating, while analyst Tal Shirizly cut the price target on the stock to 2.57 shekels (US$0.71) from 2.66. The stock closed at 2.05 shekels.

Among the banks, Discount and Hapoalim BKHPF, -3.89% each rose 0.4%, while Leumi tacked on 0.8% and Mizrahi Tefahot UMZRF moved ahead 1.3%.

Citigroup analyst Michael Klahr cut his rating on Hapoalim and Leumi to hold from buy. He reiterated Discount as a buy, making it the only Israeli bank on which he carries a recommendation.

Hapoalim and Leumi have each risen more than 20% in the past three months, and they trade above book value and at 9 times multiple based on estimated 2011 earnings, the analyst said.

“The macro backdrop is favorable, especially versus European peers, with lower sovereign and capital risk and gross-domestic-product growth of 4%,” Klahr wrote in a report dated Monday.

But competition from the capital markets for financing corporate borrowings, plus basic competition among the banks, can hold back revenue growth, he noted. Interest-yielding assets rose just 1% in the second quarter, Klahr wrote.

Of the two majors, Klahr said he prefers Hapoalim.

As for Discount’s buy rating, the analyst pegged projected upside for the stock price at 18.5%, given his 12-month price target of 8.5 shekels ($2.36). Discount closed Tuesday at 7.2 shekels.

Teva Pharmaceutical Industries TEVA, +1.80% shares slipped 0.3%.

Watson Pharmaceuticals Inc. WPI, -3.75% , the Morristown, N.J., drug maker, confirmed that it filed a new-drug application with the U.S. Food and Drug Administration covering a generic version of Teva’s Azilect for Parkinson’s disease.

Teva had sued to stop Watson from marketing the generic until a Teva patent on the drug expires. By filing the suit, Watson said, Teva stops the launch of the generic until November 2013, or sooner depending on how the courts resolve the lawsuit.

Teva’s blue-chip peer Perrigo PRGO, +0.52% also ticked down, off 0.3%.

A big gainer in the sector, shares of Prolor Biotech PBTH rallied 4.3%.

The company said the FDA gave orphan status to hGH-CTP. The product, which is in Phase II clinical trials, is under study to treat growth hormone deficiency.

The drug reduces the frequency of injections to one every one or two weeks from the current seven a week, Prolor said in a Tuesday statement. Prolor expects to complete the trial in 2011.

The FDA’s orphan status, given to drugs that treat rare illnesses, provides seven years of marketing exclusivity, lower regulatory fees and other benefits.

Defense contractor Elbit Systems ESLT, +1.64% shares were up 2%.

Spectronix shares climbed 4.1%. The producer of sensors to detect fire, gas and explosives said in a note to the TASE that it received orders totaling $7 million to supply the U.S. Army with certain system parts and replacements.

Leading the property sector was Africa-Israel Investments AFIVY, shares of which jump 6.9%.

Also higher, Jerusalem Economic climbed 3%, Bayside Land rose 2.9% and Alrov added 3.5%. Of the index’s 15 members, only Melisron lost ground, down 0.7%.