El Al tumbled 8.5% on the Tel Aviv Stock Exchange Sunday as the cabinet approved the controversial Open Skies deal with the European Union aimed at enhancing competition in the aviation sector.
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Investors sold on fears that Israel's flagship carrier will struggle in a less regulated market, exacerbating other management and financial troubles that sent the stock down 71% over the last five years. A strike by the staff of El Al, Israir and Arkia began on Sunday and was due to widen Tuesday and shut down Ben-Gurion International Airport.
The turbulence, however, was limited to El Al. The benchmark TA-25 index ended little changed at 1,203.37 points as turnover reached NIS 692.2 million. The broader TA-100 eased 0.2% to 1,072.11.
World equity markets and oil prices rebounded Friday in a relief rally after last week's sell-off on signs of sluggish global growth.The Standard & Poor's 500 Index rose 0.9% to 1,555.25, while the Nasdaq Composite Index gained 1.25% to 3,206.06.
In Europe Friday, the FTSEurofirst 300index rose 0.5% to 1,153.19. But the index was down 2.4% for the week, marred by shaky economic data from Germany and more forecast-lagging numbers from the United States.
Assaf Shaul, deputy CEO for investments at Alfa Platinum Mutual Funds, said the bearish economic data were likely to weigh on the TASE this week.
"In the share market, we expect declines worldwide and in Israel after the weak macro data in China and the United States, on top of [U.S. corporate] earnings that haven't been living up to expectations," he said. "The Israeli market will make a downward correction this week. We believe the correction will be brief and that the market remains positive for investors."
In the currency market Friday, the dollar rose 0.17% to a Bank of Israel rate of NIS 3.629, while the euro climbed 0.18% to NIS 4.7424.
In the bond market, Nochi Dankner's IDB Holding's Series Dalet bonds plunged 10.1%, raising their yield to 72%. Series Gimel and Heh bonds lost 7%, raising their yields to 1,000%. IDB Development Corporation, the closely held unit, saw its Series Chet and Tet bonds drop 6.5%.
IDB Holding tumbled 8.6%, while Discount Investment, another Dankner investment holding company, was down almost 4%.
The declines came after Bank Leumi said it had ended talks with Ganden, the closely held investment vehicle through which Dankner controls IDB Holding, over forgiving a large chunk of its debt. Adding to the IDB group's woes, the Bank of Israel said it was examining Leumi's credit policies to all Dankner companies.
Cell phone companies Cellcom and Partner both rose 2.7% Sunday, though Bezeq ended little changed. Overall, the TA-Communications index jumped 1.1%, making it the top sector of the day.
Yitzhak Tshuva's Delek Israel climbed 9.5% to NIS 10.40 after the company raised its offer to buy out minority shareholders by 13% to NIS 10.55.
Internet company LivePerson was the worst performer among TA-100 stocks, tumbling 6.1%. Other big losers included Lev Leviev's Africa Israel Investments, which dropped 3.3%, and discount grocer Rami Levy, which shed 2.5%.
With reporting by Reuters.