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Shares opened lower yesterday, but bank shares dragged the markets even lower in the afternoon after the Bank of Israel announced a further decline in the banks' share of credit in the business sector.

Financial reporting season brought little joy to investors from the likes of Osem (TASE:OSEM), Africa Israel (AFPR), The Israel Corporation (TASE:ILCO) and Fox (TASE:FOX).

The TA-100, which closed down 1.4 percent at 817.58 points, has now lost about 1 percent for the year. The TA-25 shed 1.7 percent to settle at 801.45 points, and is now 3 percent off for 2006. Turnover was a light NIS 730 million.

Losses were across the board - from banks to real estate and financials. Even the small-cap Yeter 30, which traded in positive territory most of the day, succumbed by day's end, slipping 0.8 percent.

HSBC's downgrading of Bank Hapoalim (TASE:POLI) to neutral and adjustment of its target price from NIS 31 per share to NIS 20 per share sent the stock diving 2.6 percent on a turnover of NIS 109 million. Bank Leumi (TASE:LUMI) shares scarcely fared better, sinking 2.5 percent.

The Phoenix Assurance (TASE:PHOE) bucked the trend and shot up 10.7 percent because of the news that Yitzhak Tshuva's Delek Group (TASE:DLEK) had bought a controlling share of the company. Teva Pharmaceutical (TASE:TEVA) shares closed the arbitrage gap with its New York counterpart with a 2.9 percent jump, giving it a 9 percent gain for the month of August.

Real estate shares gave back 2.2 percent of their 43 percent year-to-date gains yesterday. Africa Israel led the losers as its shares sank 4.2 percent. The company reported second-quarter profits of NIS 162 million - 4 percent less than the parallel 2005 quarter.

Shares of Blue Square (TASE:BSI), which raised NIS 911 million on last week's Blue Square Real Estate IPO, dropped 0.5 percent Sunday.

The Israel Corporation reported yesterday that it had closed out the second quarter with profits of NIS 164 million on NIS 7 billion in revenue, but its shares fell 3.1 percent.

Osem shares fell a further 1 percent yesterday after reporting a 5.9-percent rise in sales to NIS 650 million during the second quarter. The food-maker's stock has tread water this year after losing 18 percent of its value in 2005.

Fox got away relatively easily, with its stock only losing 0.1 percent.