Stocks ended the day almost unchanged on Wednesday on the Tel Aviv Stock Exchange after a volatile session that saw shares falling steeply in the morning and seesawing up and down in the afternoon.

The sharp drops early in the day were mostly likely the result of investor concerns about the problems in a number of Israel's highly leveraged conglomerates, especially Nochi Dankner's IDB group.

In addition, early trading was influenced by Moody's Investors Service announcement on Tuesday that it was changing its outlook on the Aaa rating of the European Union to negative, warning it might downgrade the bloc if it decides to cut the ratings on the EU's four biggest budget backers.

The blue-chip TA-25 index was almost unchanged at 1,113.67 points and the broader TA-100 index remained stable at 990.53 points. Technology shares were once again the main ray of hope for the day: The Biomed index gained 1.1% and the BlueTech-50 index rose 0.8%. Most of the remaining major indexes were in the red. The TA-Banks index lost 0.2% and the Real Estate-15 index fell 1.3%. The TA-Insurance index was the big loser, down 1.7% for the day. Mid-cap and smaller shares did not fare as badly as large-cap stocks.

Pluristem Therapeutics climbed 11.4% before trading in the share was halted after the company announced its placental stem cell trials had saved the life of a third leukemia patient.

Turnover continued to be quite low at NIS 725 million for the day, even lower than the average volume over the past month and 50% below the 2011 average. It seems that local investors are still sitting on the fence and waiting for events, both local and international, to clear the picture.

Corporate bond indexes were also mixed, but little changed. Government bonds were down slightly on the whole.

Waiting for the ECB with bated breath

The dollar strengthened on Wednesday against the shekel, up 0.3% to a representative rate of NIS 4.029.The euro moved in the other direction, losing 0.1% against the local currency and the representative rate was set at NIS 5.058. The euro initially fell against the dollar in global forex markets, but rebounded on expectations the European Central Bank would implement a bond-buying program to reduce Spanish and Italian borrowing costs.

"These days there is very low liquidity in the dollar vs. shekel trading, and both in the stock market and forex [markets] we see very little movement," said Moshe Shalom, the head of research at FXCM Israel.

Movement is concentrated around the 4.02 level and the people who could move the dollar out of this range are too busy concentrating on what is happening overseas, he added. All eyes are on the actions of Mario Draghi, the ECB president, who is pushing hard to imitate the actions of U.S. Federal Reserve Chairman Ben Bernanke in an attempt to save the euro, said Shalom.

European shares recovered strongly on the hopes the ECB planned to buy unlimited amounts of short-term debt to ease the region's financial crisis, but Asian markets fell strongly once again.

 

Reuters contributed to this report.