Market Report / Fears of U.S. Move Into Syria Send TASE Shares Lower

TA-25 index declines 1.22% on the day for a 2.3% loss on the week.

The Tel Aviv Stock Exchange dropped sharply Thursday to follow the global downturn amid a perfect storm of economic and geopolitical worries that led shares broadly lower.

The TA-25 index of blue chips dropped 1.22% to 1,203.74 points and the broader TA-100 index fell 1.1% to 1,074.03 points on turnover of NIS 913.8 million.

While the TA-25 index traded lower throughout the session it took a sharp tumble in the final half hour. The day's declines left the two indexes down 2.3% and 2.2%, respectively, for the week.

Traders said the end-of-the-session drop came amid concerns that the United States may send troops into Syria. On Wednesday U.S. Defense Secretary Chuck Hagel said he was sending Army planners to Jordan, as the Syrian conflict worsens.

A U.S. official said the number of planners in Jordan would remain at roughly 200 because an existing team is largely being withdrawn. Still, the unit could theoretically command combat troops and it constitutes an enhancement over the previous, ad hoc team, the official said.

Stock markets around the world dipped Thursday, fluctuating between gains and losses as investors worried about the economic outlook following weak U.S. data.

The Philadelphia Federal Reserve Bank said its business activity index dropped to 1.3 in April, from 2.0 the month before, while the Conference Board said its Leading Economic Index dropped 0.1%, compared with an expected 0.1% increase and the first drop in seven months.

Europe's broad FTSE Eurofirst 300 index was down slightly, hitting its lowest point of 2013 at one point before recovering a bit. Frankfurt's DAX fell 0.4% while the Paris CAC-40 edged 0.1% higher. In New York, the Standard & Poor's 500 Index was down 0.1% at 1,550.35 points in late morning trading.

The stock market's gloom, however, didn't reach forex trading on Thursday. The dollar remained almost unchanged against the shekel, losing less than 0.03% of its value to a Bank of Israel rate of NIS 3.6230. The euro, however, was down more than 0.5% to NIS 4.7337.

Hezi Yanushavsky, head of research at ATrade, said in a comment Thursday that the U.S. currency is benefiting from the negative sentiment in global markets and the risk that the Bank of Israel may intervene again in trading as it did earlier this month.

"The fear in the markets is serving the interest of the Bank of Israel because investors worldwide prefer to buy dollars at times of declines and uncertainty," he said. "We believe that dollar rate is likely to test the resistance level next of NIS 3.67. If the markets really fall, the greenback may go back up to NIS 3.8."

El Al Airlines ended down 5.4% as the cabinet readies to vote on whether to approve an Open Skies agreement with the European Union. The move, which would increase competition for Israel's three carriers, prompted protests by management and labor.

Workers at El Al and the two other airlines threatened on Thursday to stage a strike on Sunday, if Open Skies is approved (see story on page A8).

Bank shares extended their losses another day, with the TA-Banking index down 1.4% at 1,12.65 points. Israel Discount bank again led the drop, falling 3.2%, with Mizrahi Tefahot Bank trailing in a 2.5% decline.

Bank Leumi, which has been ensnared in a controversy about loan write-offs to Nochi Dankner, dropped 1.2% even though Labor Party chairwoman Shelly Yacimovich called for depositors to withdraw their money from the bank.

First International Bank of Israel, which was tagged with a Negative outlook on its debt by credit rating agency Midroog ahead of a NIS 400 million issue, nevertheless did better than other banks, falling just 0.7%.

Israel Chemicals resumed its downward trajectory, after a brief rise Wednesday, finishing 2.5% lower on turnover of NIS 74.5 million. The stock has been haunted by Finance Minister Yair Lapid's stated opposition to the company's sale to Canada's Potash Corporation of Saskatchewan.

ICL's parent company, The Israel Corporation, whose shares Potash wants to buy, fell 3.2%.

Online translation company Babylon was the top gainer among TA-100 index stocks, adding 3.3% after a Union Bank analyst recommended the stock. Bezeq was the volume leader, with NIS 75.2 million shares changing hands, on a 1.3% rise.
With reporting by Reuters.

AP