The sharp drop in share prices at the weekend was compounded by the decision to suspend a daily 10 per cent fluctuation limit on share price movements.
A Tel Aviv stock exchange spokesman said the limit had later been reintroduced until further notice.
The benchmark Mishtanim index of leading shares closed 3.72 points higher at 168.9. On Sunday it fell 18.2 points to 165.2.
The Sunday session was the first since the government's surprise announcement last week of a 10 per cent tax on profits from share sales.
Trading stabilised after the government hurriedly approved proposals to allow share profits against losses after the levy comes into effect in January.
Final details of the package have yet to be worked out, however, casting a shadow over the Israeli market, which has fallen 25 per cent since the beginning of the year.
The exchange has suffered a series of crises of confidence with several brokers being charged by police and securities officials over insider dealing offences.
The market closed on Thursday and Friday to prevent panic selling by investors who feared the tax would erode their previously tax- free profits.
David Cohen, corporate broking director at Societe Generale Strauss Turnbull, said he expected the slide to be temporary.
The gains tax, he said, was standard in most advanced markets.
(Photograph omitted)Reuse content