Market Report / Bank Shares Lead Tel Aviv Stocks Down

Israel Chemicals bucks trend after UBS reiterates Buy rating and NIS 55 price target.

Bank shares led the Tel Aviv Stock Exchange lower Wednesday after a two-day holiday break as the market trended lower in line with world bourses.

The TA-25 index of blue-chip stocks fell just under 1% to 1,218.55 points, while the broader TA-100 shed 0.9% to 1,085.95 on turnover of just under NIS 962 billion.

Bank shares led the drop, with the TA-Banking index down 2.2% at 1,128.57. Bank Mizrahi-Tefahot paced the declines, tumbling 3.2%. Israel Discount Bank dropped 2.6% and Bank Hapoalim 2.2%. Bank Leumi, which has attracted unwanted attention for considering forgiving much of tycoon Nochi Dankner's private debt, fell 1.9%. The only bank stock to escape the selloff was First International Bank of Israel, which eased 0.1%.

Israel Chemicals recovered strongly, gaining 2.1% to NIS 44.10 on turnover of NIS 128 million. It had dropped more than 10% amid concerns that the government would block a sale of the company to Canada's Potash Corporation of Saskatchewan.

UBS analyst Roni Biran reiterated his Buy rating and NIS 55 price target for ICL, saying the price had already discounted for higher royalties the company will be paying the government, as well as potash prices of $400 a ton.

World equity markets and commodities fell Wednesday as global growth concerns sparked by the International Monetary Fund overshadowed the recent prospect of central bank stimulus from Japan on top of U.S. monetary easing.The IMF cut its 2013 forecast for global growth to 3.3%, down from its January projection of 3.5%. It also trimmed its 2014 forecast to 4%.

MSCI's all-country world equity index, which tracks shares in 45 countries, dipped 1.2% to 355.65 points, reversing some of the previous day's sharp gains. In Europe, the broad FTSEurofirst 300 index extended a three-day losing streak, falling 1.5%. In New York, the Standard & Poor's 500 Index was down 1.3% at 1,552.76 in late-morning trading, and the Nasdaq Composite Index was off 1.8% at 3,206.75.

In foreign-currency trading, the dollar lost around 0.08% to the shekel to a Bank of Israel rate of NIS 3.6240, while the euro gained 0.4% to NIS 4.7592.

"The market is in a waiting period while the exchange rate starts above NIS 3.60 but hasn't created any upward momentum after a two-day break in forex trading," said currency trader FXCM. "A rise over NIS 3.65 is likely to create a push on the dollar-shekel, signaling a significant correction. Against that, a fall below NIS 3.60 will put the Bank of Israel to the test."

BioLine jumped 7.4% after the biopharmaceutical company announced positive Phase IIa results for BL-7040, an oral drug for treating inflammatory bowel disease. The study showed that BL-7040 is safe and effective in treating ulcerative colitis, a form of IBD.

Engineering-services company Baran rose 1.1% after it and a partner won a tender to provide project-planning services for construction of Timna Airport near Eilat. Baran will share the NIS 70 million contract on a 50-50 basis, it said.

Other big gainers Wednesday included online translation company Babylon and LivePerson, which provides companies with chat, voice and content delivery services. Those stocks rose 2.3% and 1.8% respectively. Among the losers were Ormat, the geothermal power company, which tumbled 2.8%, and semiconductor foundry TowerJazz, which lost 2.7%.

Ratio finished the day up 2.2% after the company said that it and partners Edison International SpA and Israel Opportunities had been awarded exploration licenses for the Neta and Roi prospects. Ratio holds 70% of the rights.

With reporting by Reuters.

Motti Kimche