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The mini-crash on the Tel Aviv Stock Exchange is broadening. The sharp fall in shares and bonds continued yesterday, while the shekel lost further ground against the dollar.

The TA-25 index has not risen in eight trading sessions, and in five of those eight, the index registered a drop. Yesterday, the share indexes fell between 1.2 percent (the TA-25) and 3.2 percent (the TA-Real Estate index). The exchange registered a record turnover, breaking the NIS 2 billion mark.

Finance Minister Benjamin Netanyahu is not worried about the slide stocks and the shekel posted yesterday because, as he said, Israel's economic situation is robust. Volatility over a day or two in the capital market is not cause for alarm, the finance minister said.

Netanyahu reiterated his firm denial of having any intention of resigning from the government anytime soon, ahead of the disengagement, a rumor that sent investors into a quiver yesterday. He said he intends to remain in the post of finance minister until the next general election in 2006.

The capital market was talking about huge redemptions from provident funds invested in shares and bonds, and massive movement to dollar funds.

The current trend has been going on for several days and has exacerbated the drop in prices of small shares and the shekel.

The shekel continued its sharp drop yesterday. The dollar, which opened the day with a representative rate of NIS 4.50, rose 0.9 percent, to NIS 4.54, by the time the new representative rate was set. The shekel has fallen 23 agorot or 5.6 percent against the dollar since it peaked in March.

Those active in the market spoke of hysteria and fear of a crash. Others said it was just a "temporary hullabaloo" that would soon pass.

Many pointed to the uncertainly created by the disengagement - if and how it will proceed, and especially what will happen afterward - as the main cause for the drop in the market. One of the main concerns relates to a possible break-up of the government coalition immediately after the disengagement, and in any event, difficulty passing the 2006 state budget.

Even if the budget passes, it is expected to be a problematic budget that includes extra spending related to the disengagement and the prime minister's weak political situation.

"The Finance Ministry does not control the stock market nor forex exchange rates," Netanyahu said. "These are regular developments in free markets. The situation of Israel's economy is very good, so the changes should not affect it," he added. "Israel's economy is growing faster than most of the western economies, the level of foreign investments in Israel is higher than ever before, and unemployment is dropping."

Unlike in politics, the finance minister quipped, "there's no spin in economics. Israel's is growing because its economy is right."

As for the dollar, its rebound is not confined to Israel alone, Netanyahu said. It is a global phenomenon, caused by the weakness of the European economies. The European Union failed to carry out necessary structural reforms and changes that Israel has succeeded in approving and will be implementing, he said.