Investors Unmoved by Al-Qaida Hit

Global, Tel Aviv shares fell back after brief spike of exuberation

Stocks the world wide erased gains posted after the news broke of the hit on Al-Qaida leader Osama bin Laden. Investors from Tel Aviv to Frankfurt to New York seemed to have quickly grasped that the arch-terrorist's death is of only fleeting significance and if anything might spark a spate of retaliatory terror attacks on the West.

But local minds were very much on another story - Teva Pharmaceutical Industries' third giant acquisition in less than three years. The pharma giant, the biggest generic drug maker in the world, closed 0.3% lower, but on more than half the total turnover for the day.

So while geopolitical tensions may have eased for a moment, emotional tensions in the mind of investors seemed to have intensified. The CBOE Volatility Index, Wall Street's so-called "fear gauge," rose more than 5%, and U.S. crude prices surged.

In Tel Aviv the leading indexes were red across the board, but the losses were minor. Like leading indexes around the world, the benchmark TA-25 index began with a relief-fueled spike at the break-of-dawn news, but closed 0.3% lower. The broader TA-100 index lost 0.1%. Total turnover was thin at NIS 1.6 billion as investors by and large climbed onto the fence.

Locally the news of the day was Teva, which announced plans to acquire U.S. brand-drugs maker Cephalon for $6.8 billion, in enterprise value terms, it said. Teva aped the benchmark with a starting gain and closed 0.3% down - on turnover of NIS 861 million. The biggest gain among TA-25 stocks, and by a mere 0.5%, was food-maker Strauss Group, which is reportedly about to raise prices.

European exchanges dipped toward the close but managed to generally stay in positive territory. The strongest gains were in Copenhagen and London, which closed 1% higher. Asian markets were more mixed, moved by domestic events rather than any sentiment about the U.S. Navy SEALs attack in Pakistan that eliminated bin Laden once and for all. Chinese stocks were flat but Japanese stocks climbed 1.6%, closing above 10,000 points for the first time since the great March 11 quake. Traders ascribed the spurt to optimism that Wall Street shares would rise after bin Laden's death. Pity about that: They didn't.

Back in the Holy Land there is some concern that defense exports might suffer if terror-related tensions abate. Shares of defense electronics maker Elbit Systems recorded a minor loss of 0.7% on turnover of NIS 11 million. Magal Systems, which makes perimeter security systems and related gear, didn't move at all. Anywhere. Turnover in the stock, briefly a darling of Wall Street, was NIS 81,000.