TA, world markets plunge as China crashes

Israel's main stock index fell the most in seven months Tuesday, following global equity declines triggered by a plunge in China's markets.

By NEWS AGENCIES
February 28, 2007 07:14
3 minute read.

SHARES TEL AVIV Israel's main stock index fell the most in seven months Tuesday, following global equity declines triggered by a plunge in China's markets. Africa Israel Investments Ltd., which invests in real estate and construction, paced declines. The TA-25 Stock Index fell 2.1 percent to 975.66 in Tel Aviv, the most since July 13. All 25 stocks in the benchmark fell. Investors bought and sold about NIS 1.8 billion in shares and convertibles. China's stocks tumbled the most in 10 years, leading to declines in markets around the world. US stocks fell by the biggest margin since November, led by commodity producers, consumer and technology companies that rely on demand from China. "Once things look ugly in China, people are less likely to invest in an emerging market," Avi Weinreb, a trader at Clal Finance Batucha Investment Management in Tel Aviv, said by phone. Africa Israel declined 2.1% to NIS 371.40. The country's largest property developer by market volume said a change in accounting rules will erase a capital gain it expected to post from the sale of its 65% stake in a Wall Street building. The change, which went into effect on February 22, means the Yehud-based company won't book a $55 million capital gain from the $325m. sale of 14 Wall Street that it announced on January 21. Israel Chemicals Ltd., a company that extracts minerals from the Dead Sea to produce fertilizers, declined 1.3% to NIS 26.08. Potash Corp. of Saskatchewan Inc., the world's largest miner of potash for fertilizer, which holds a 10% stake in Israel Chemicals, dropped 1.3% Monday in New York. Israel Petrochemical Enterprises Ltd. rose 1.1% to NIS 43.19. Israel Corp. and Scailex Corp., a unit of Israel Petrochemicals, increased their stake in Oil Refineries Ltd., Israel's biggest refiner, to more than 50% after they bought shares in the stock market Monday. WALL STREET US stocks dropped the most since November as the plunge in Chinese shares sparked a global selloff and raised concern that investors will dump equities after a four-year bull market. The Standard & Poor's 500 Index fell for a fifth day, its longest losing streak since March 2004, led by commodity producers as well as consumer and technology companies that rely on Chinese demand. The Dow fell 546.02, or 4.3 percent, to 12,086.06 before recovering some ground in the last hour of trading. Because the worst of the plunge took place after 2:30 p.m., the New York Stock Exchange's circuit breakers, designed to halt precipitous moves, were not activated. EUROPE Shares slumped the most in three-and-a-half years as a result of the fall in Chinese equities. The Dow Jones Stoxx 600 Index dropped 3% to 370.56 in London, the steepest decline since May 2003, with all but four of its members falling. The Stoxx 50 retreated 2.6% while the Euro Stoxx 50, a measure for the 13 nations sharing the euro, lost 2.7%. National benchmarks slid in all 18 western European markets. France's CAC 40 dropped 3% while the UK's FTSE 100 lost 2.3% to 6,286.10 and Germany's DAX slid 3%. ASIA Asian stocks fell from a record. China's shares tumbled the most in 10 years on concern the Chinese government may introduce measures to cool the stock markets as the National People's Congress meets next week. The Morgan Stanley Capital International Asia-Pacific Index lost 0.2% to 148.26 in late trade Tuesday in Tokyo. Japan's Nikkei 225 Stock Average lost 0.5% to 18,119.92. CURRENCIES The yen rallied across the board Tuesday, gaining 1.5% against the dollar as a combination of factors including an almost 10% slump on the Shanghai stock market overnight encouraged traders to unwind carry trades. Meanwhile, the dollar fell to almost two-month lows against the euro and yen. In New York trading, the dollar was quoted at 119.05 yen, compared with 120.74 late Monday, The euro stood at $1.3223, compared with $1.3182. The euro fetched 157.4 yen, compared with 158.96 yen. COMMODITIES Crude oil rose above $62 a barrel for the first time this year on speculation US fuel inventories declined because refineries are repairing units. Crude for April delivery rose 1.1% to $62.08 a barrel just before midday on the New York Mercantile Exchange. Gold prices in New York fell the most in a week as a decline in energy costs reduced the appeal of the metal as a hedge against inflation. Gold futures for April delivery dropped 1.6% to $679.10 an ounce in early Tuesday morning trade on the Comex division of the NYMEX. (News Agencies)


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