Market Report / Erroneous Order Sends Tel Aviv Shares Higher

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While many world share markets were dropping Monday due to the EU's plan to fund a Cyprus bank bailout by taxing depositors, Tel Aviv mysteriously rallied late in the day. Alas, it was an erroneous order.

The order for five TA-25 index March contracts sent shares higher as traders speculated that investors were closing short positions, among other scenarios. After trading the Tel Aviv Stock Exchange said the mistaken order had been canceled.

Still, the TA-25 blue-chip index ended 0.8% higher at 1,244.64 points. At one point it had been up as much as 1.3%. The broader TA-100 gained 0.5% to 1,105.82. Turnover reached NIS 984 million. Banks were the big beneficiaries of the rally, unlike their peers overseas, which led declines. The TA-Banking index rose 1.6% for the day to 1,186.03.

Until mid-afternoon, the TASE had been taking its cue from global stock markets, which fell as European sovereign debt returned to the forefront after the euro zone's decision on partially funding a bailout of Cyprus by taxing bank deposits.

"The market is operating under the darkening shadow of the Cyprus effect," said Ran Shahar, investment manager at Alfa Platinum. "If people fear that their deposits are going to be nationalized they'll run to pull out their money, which could lead to the collapse of the banking system . Until the European Central Bank acts to calm the situation, Israeli investors must heed the new uncertainty and hold on to their positions."

Although Cyprus' parliament put off until Tuesday a vote on the measure, the move hit confidence in the European banking sector, sparking concerns that the euro zone might go after depositors in other euro zone nations. The euro and bonds of troubled European sovereign debtors also fell.

London's FTSE 100, Frankfurt's DAX and Paris' CAC-40 were down 0.3%, 0.3% and 0.4%, respectively, leaving MSCI's global share index down 0.8%. On Wall Street at midday, the Standard & Poor's 500 Index was down 0.2% at 1,557.02.

Against the shekel, the euro weakened sharply, losing more than 0.6% to a Bank of Israel rate of NIS 4.7755. The dollar advanced 0.3% to NIS 3.6930.

In contrast to the other banks, Mizrahi-Tefahot, Israel's fourth-largest lender, fell 0.6% after it reported a 10% drop in fourth-quarter profit, weighed down by lower financing income and higher operating expenses and taxes. The first of Israel's top banks to report, Mizrahi posted a net profit of NIS 270 million, compared with NIS 299 million a year earlier and an average of NIS 273 million in a Reuters poll of analysts.

Discount supermarket chain Rami Levy lost 1.1% even after it reported that its operating profit climbed nearly 22% in the fourth quarter to NIS 30 million. The operating margin edged up to 4.25% from 4.2%.

Other big movers included semiconductor maker TowerJazz; its 4.9% tumble made it the biggest decliner among TA-100 stocks. Babylon, the online translation company, dropped 3.1%, and semiconductor company Mellanox fell 1.6% on turnover of NIS 55 million. On the plus side, EZchip added 3% and Nice Systems, the maker of digital monitoring technology, rose 2.5%.

Oil Refineries Ltd. (Bazan) fell 1.1%. Israel's biggest refiner said it lost $198.4 million in 2012, capped by a $72 million loss in the final quarter amid weakness in its world petrochemicals business and higher operating costs.

With reporting by Reuters.

Mizrahi-Tefahot branch in Carmiel. Credit: Abdullah Shama