Market Report / Banks, Wall Street Drive TA-25 Lower

The dollar holds close to steady against the shekel as the greenback climbs to a near two-week high against the euro and a more than one-week high against the yen.

Tel Aviv shares ended the week lower on Thursday, weighed down by financial stocks and a sharply lower Wall Street.

The benchmark TA-25 index lost 0.6% by closing time to end at 1,204.89 points, most of the loss occurring after 2 P.M. when the news about U.S. stocks began seeping in. The TA-100 index finished 0.7% down at 1,09926. Turnover was a light NIS 890 million.

The day's loss left the two main indices virtually unchanged for the week, with the TA-25 up just 0.2% to leave its year-to-date return at 1.6% and the TA-100 up 0.1%. For the year it is up 4.8%.

Banking and insurance stocks took a dive, with the TA-Insurance index down 2.6% for the day at 1,368.23 and the TA-Banking index down 1.2% at 1,135.91. Among insurers, Menorah lost 3.6%, Clal Insurance 3.5% and Phoenix 3.4%. First International Bank of Israel led the banks southward, dropping 2.2%, with Bank Leumi not far behind with a 2.1% decline and Bank Hapoalim off 1%.

The one notable exception to the bloodletting was Mizrahi Tefahot Bank, which advanced 1.3% after reporting strong second-quarter earnings (see story on page A8).

The second blow to TASE stocks on Thursday came as global equity markets swooned and bond prices sold off after slightly upbeat U.S. job data and gains in consumer prices added weight to the view that the Federal Reserve will soon begin to trim its massive bond-buying program.

The number of Americans filing new claims for jobless benefits fell to almost a six-year low last week while consumer prices hinted at rising inflation in a sluggish economy.

The Dow Jones industrial average was down 1.4% at 15,127.99 in late morning New York time. The Standard & Poor's 500 Index was also 1.4% lower at 1,662.15 while the Nasdaq Composite Index was off 1.6% at 3,610.12. The FTSEurofirst 300 of leading European shares fell 1.1% to 1,227.14.

In foreign currency trading, the dollar held close to steady against the shekel as the greenback climbed to a near two-week high against the euro and a more than one-week high against the yen. The U.S. currency's Bank of Israel rate was set at NIS 3.5720, a decline of less than 0.03%. The euro strengthened 0.2% to NIS 4.7452.

The government's Shahar bond for 10 years registered a sharp 0.57% decline, raising its yield to 3.84%. Its inflation-index Galil bond fell 0.4% to a yield of 1.71%. On Thursday, the global credit rating agency Moody's affirmed Israel's government debt ratings, leaving it at its current A1 level with a stable outlook.

Apparel retailer Fox led gainers among TA-100 stocks on Thursday, advancing 4.3%, a day after it turned in a 15% increase in second-quarter profit to NIS 41.3 million, its 18th consecutive quarterly increase.

Bezeq was the most active stock of the day, with NIS 72 million, changing hands. Israel's biggest telecommunications company scratched out an 0.7% rise despite the fact that Gilad Alper, an analyst at Excellence Brokerage, lowered his rating on the shares to Market Underperform from Market Perform citing the growing competition in fast Internet from Israel Electric Corporation's network in development.

El AI Airlines advanced 2.8% after its reported $3.7 million profit in the April-June quarter versus a $6.1 million loss a year earlier. Revenue rose 2.5% to $529.7 million, with higher passenger sales offsetting a decline in cargo revenue.

Other gainers included software company Magic, which added 2.2% and energy shares Delek Drilling and Ratio, which rose 2% and 1.8%, respectively. LivePerson, which provides web services to enterprises, dropped 4.1%.

Reuters contributed to this report.

AP