JERUSALEM, June 7 Reuters Israel39;s shekel appreciated 1 to a twoweek high against the dollar on Wednesday amid expectations of progress in talks over the government39;s controversial judicial overhaul plan.

The Israeli currency moved to 3.65 versus the dollar, its strongest level since May 22, two days before Prime Minister Benjamin Netanyahu said legal system changes were back on the agenda but that he sought a compromise with the opposition.

The plan announced in January triggered a political crisis and mass protests, drove away investment, cut growth prospects and weakened the shekel, which in turn kept inflation high and led to more Bank of Israel rate hikes.

Last Friday, the shekel reached a more than threeyear low of 3.753 per dollar.

But next week, parliament is expected to vote on two lawmakers to join a committee that will select judges, including to the Supreme Court, one of the few checks and balances in Israel39;s political system.

Analysts believe a member of the opposition could be one of those appointed and a first sign of compromise talks bearing fruit and a setback for hardliners in Netanyahu39;s religiousnationalist government who want more control over judicial appointments.

Rafi Gozlan, chief economist at the IBI Investment House, said market concerns over the judicial plan may be mitigated with an opposition member on the panel so that the depreciation of the last two weeks in the shekel has been almost completely erased.

Still, the situation…