Market Report / Spurned by Potash Corporation of Saskatchewan, Israel Chemicals Leads TASE Lower

ICL shares fell 4.5% in heavy trading after Canadian company bows out of acquisition effort.

The Tel Aviv Stock Exchange spent all of Thursday in minus territory, with the expiry of options on the TA-25 index, historically known as "Maof options," and the announcement in the afternoon by Potash Corporation of Saskatchewan that it was rescinding its bid for control of Israel Chemicals dragging down the indexes.

PotashCorp attributed its decision to political and union opposition. As a result shares of ICL, which had been under pressure since Finance Minister Yair Lapid expressed opposition to the sale two weeks ago, closed down 4.5%. Some NIS 179 million shares changed hands Thursday, making it by far the most heavily traded stock of the day.

Shares of the Israel Corporation, which controls 52.3% of ICL and stood to be the biggest beneficiary of the sale, closed 3.8% lower.

The benchmark TA-25 index ended down 0.8% to 1,205.09 points, while the broader TA-100 index fell 0.7% to 1,078.875 points. Turnover, lifted by the Maof options expiry, exceeded NIS 1.5 billion. For the week the TA-25 index closed down 2%, cutting its increase for the year to date to 1.6%. The TA-100 index lost 1.6% on the week and is now just 2.8% higher for the year.

World equity markets advanced on Thursday, as solid corporate earnings and figures indicating the U.S. labor market remains resilient despite signs of slower growth buoyed optimism and sent bond prices lower.

Wall Street followed gains in global and emerging market indexes after the U.S. Labor Department said the number of Americans filing new claims for unemployment benefits fell last week by a surprisingly large 16,000. The Standard & Poor's 500 Index was up 0.68% at 1,589.46 points and the Nasdaq Composite Index climbed 0.85% to 3,297.49 points.

Expectations that the European Central Bank will cut interest rates have lifted European shares toward 2013 highs over the past week and kept the euro near a three-week low to the dollar. Senior sources involved in the deliberations have told Reuters that momentum is building for monetary action to help the recession-hit euro zone.

The FTSE Eurofirst 300 index of top European shares rose 0.66% to close at a provisional 1,199.71 points, near the peak of 1,209.05 points it hit in mid-March.

In foreign currency trading the dollar continued slipping against the shekel, losing 0.36% to a Bank of Israel rate of NIS 3.6060. The euro edged up 0.14% to NIS 4.7144. Currency trader FXCM said it expected the central bank would have to intervene in the forex market to reverse the dollar's weakness as it did once earlier this month

"The Bank of Israel intervention temporary put a brake on the [dollar's] negative drift but didn't create a real turnaround in the shekel-dollar rate, which remains under the resistance level of NIS 3.65," it said. "It is pretty evident that with the current fundamentals the shekel can be expected to continue to strengthen against the dollar."

Mellanox shares plunged 7.9% in unusually heavy trading of NIS 83.5 million. Although the semiconductor company posted non-GAAP net income in the first quarter of $4.3 million, up from $30.7 million a year ago, Mellanox cut its 2013 earnings estimates to $1.06 a share from $2.11 and its 2014 estimates to $1.89 from $2.91. Needham & Company downgraded Mellanox from Buy to Hold on lack of visibility/clarity and lumpiness in the business model.

Shares of Nochi Dankner's IDB Holding Corporation fell 4.9% as its debt woes mounted. Attorney Yuri Nechushtan, a small bondholder, on Thursday petitioned the court to close down the company and reject the settlement other bondholders are negotiating with the company.

Other big losers in Thursday's trading were Lev Leviev's Africa-Israel Investments, which ended down 5.7%. TowerJazz, the chip foundry, lost 3.9% and Phoenix Insurance declined 3.2%.

Biotech company Compugen led the TA-100 index for daily gains, adding 5.3%. Avgol, which manufactures nonwoven textiles, was just behind with a 5.2% rise. Melisron, the property company controlled by the Ofer family, rose 2.2% to NIS 77.98 after Leumi Partners raised its recommendation to Market Outperform and set a target price of NIS 88 per share.

With reporting from Reuters.

Bloomberg