Market Report / Delek, France Drag TASE to 2.5% Loss

The talk of the town was the haircut Delek Group is delivering to bondholders of Delek Real Estate, which dragged down the Oil & Gas index 5.3% Monday.

Israeli shares retreated across the board on Monday, depressed by the long-anticipated haircut looming at Delek Real Estate and the dark threat of a French downgrade - not to mention an American one after the tragically-comically misnamed, bipartisan "super-committee" formally announced its failure to agree on a debt deal. Oh well.

Over here, the talk of the town was the haircut Delek Group is delivering to bondholders of Delek Real Estate, which dragged down the Oil & Gas index 5.3% Monday. The benchmark TA-25 index lost 2.5%, to 1,048 points, and the TA-100 index lost 2.4%, to 953 points. In fact, most of the niche indexes lost about 2.5% on Monday. Turnover remained thin, at NIS 1.5 billion.

But a closer look at the Oil & Gas shows the entire sector was in the doghouse on Monday: Avner (a Delek company ) lost 5.4%, Delek Drilling lost 5.3%, and Globe Exploration (which isn't a Delek company ) fell 7.4% - and so on. None were spared the wrath. Delek Group itself, the holding company at the top of Yitzhak Tshuva's business group, lost 8%.

Bank shares also stood out, with Leumi and Discount Bank losing 4%, Hapoalim falling 1.2%, and Mizrahi-Tefahot off by 3.4%. The banks are due next week to deliver their third-quarter reports, which are expected to be feeble. Nevertheless, on Monday their stocks did not lose much more than the benchmarks.

Certainly no backwind was to be had from American or European markets, where screens were red and faces were white. European shares fell to their lowest close in nearly seven weeks, with benchmarks losing anywhere from 1.7% (Copenhagen ) to 3.8% (Helsinki ). British shares lost 2.5%, German stocks fell 3.2%, and French shares lost 3%.

The political deadlock in Washington didn't help assuage nerves shattered by Moody's warning on France - namely, that a sustained rise in its debt yields, coupled with weakening economic growth, could harm its ratings outlook. The euro zone's second-largest economy might lose its blue-chip AAA status.

Here, economists agree that the economy is slowing, though economic growth remained a fairly brisk 3.4% in the third quarter, according to preliminary estimates. But Leader Capital Markets dourly points out that much of that was thanks to nonrecurring major investments, such as Intel's in expanding its capacity in Kiryat Gat, which alone lifted the "investment in machinery and equipment" segment by 30% in the third quarter. As third-quarter reports roll in, Israel Chemicals sharply higher third-quarter net profit and revenue (see Page 8 ), but fell by 2.5% nonetheless. Oil Refineries lost 1.2% after admitting to a loss of $24.6 million for the quarter, compared with net profit of $23.1 million in the corresponding quarter of 2010. Oil Refineries belongs to Israel Corporation, which tumbled 5.1% on Monday. Real estate company Alrov sank 4.1% despite reporting a 10% increase in operating profit to NIS 87 million. With reporting by Reuters.