* Blue-chip index ends up 0.4 pct at 1,237.85 points
* Buoyed by strong economic growth
* Volumes moderate
(Adds details, trader comments)
By Steven Scheer
JERUSALEM, April 6 Israel's blue-chip Tel Aviv 25 index .TA25 rose 0.4 percent to close at an all-time high on Tuesday, as strong economic growth continued to buoy the stock market.
In the first full trading day since March 28, the TA-25 index <0#.TA25> closed at 1,237.85 points in moderate volume of 1.6 billion shekels ($432 million) to eclipse a previous high of 1,237.13 set on Oct. 31, 2007. It had risen as high as 1,242.39 early in the session before selling emerged.
The broader TA-100 index .TA100 edged up 0.2 percent to 1,160.95. Government bond prices <0#ILGOI=TA> closed 0.2 to 0.8 percent lower, while the shekel ILS= was mostly flat at 3.7 per dollar.
Israel's equities market had either been closed or traded in shortened sessions since March 29 due to the seven-day Jewish Passover holiday. Its previous trading session was last Thursday.
After surging some 70 percent in 2009, the Tel Aviv bourse is up another 8 percent so far in 2010 on the heels of a rapidly rebounding economy.
"Israel's economy only had a two-quarter recession and now we are back to trend growth," said Saar Golan, a trader at the Clal Finance brokerage. "The general mood in the markets are for continued gains -- even if (some) people are calling for a correction."
The economy contracted in the fourth quarter of 2008 and first quarter of 2009 before posting positive growth starting in the April-June period of last year. Growth was an annualised 4.9 percent in the fourth quarter and the economy is expected to grow at least 3.5 percent in 2010.
Golan said some forecasters call for growth of as much as 5 percent.
"These numbers support more profits at local companies," he said.
Gains have been broad-based but led by telecoms and financial companies, although bank shares are believes to still be cheap after getting hammered starting in 2008.
"Overall, it seems the world continues to grow and become richer ... and it appears that for the reasonable investor it is worth staying on the course in the market and not look for short-cuts," said Elah Alkalay, vice president of business development at the IBI Investment House.
Traders noted that local institutional investors such as pension funds have sharply increased their weighting in Israeli stocks. Foreign investors have also been more active buyers in Israel, as well as in emerging markets in general.
"But we will start to see more net sellers as we go to the MSCI period," Golan said, referring to Israel's switch to developed market status next month from an emerging market. ($1 = 3.7 shekels) (Editing by Simon Jessop)