Israel's benchmark index declined, led by Bank Hapoalim Ltd. and Mizrahi Tefahot Bank Ltd. on concern the banking fee cuts proposed by the Bank of Israel yesterday may hurt lenders' earnings.
The TA-25 Index lost 0.5 percent to 951.11, as 20 stocks fell and five gained. The measure advanced 2.7% in the first month of 2007. Investors bought and sold about NIS 1.72 billion in shares and convertibles.
Bank Hapoalim, Israel's largest lender, dropped 1.2% to NIS 19.72. Mizrahi, the country's fourth-biggest bank, declined 1.3% to NIS 29.05.
The Bank of Israel yesterday drafted legislation giving its banking supervisor the power to regulate lender charges in a bid to increase competition in the industry.
Such legislation "would be negative for the banks," Hugo Swann, an analyst at Credit Suisse Group in London, wrote in a report Wednesday. The impact of reduced fees and commissions on the banks' earnings would be "significant."
Magal Security Systems Ltd. climbed 1.5% to NIS 40.38. The maker of electronic security fences received a $6 million contract for a project to protect several military bases in Israel, the Yahud, Israel-based company said.
US stocks were cautiously higher on Wednesday, after a weak manufacturing survey revived hopes that the Federal Reserve, which will unveil a decision on interest rates this afternoon, may take less of a tough stance on inflation. Earlier, news that economic growth had accelerated in the fourth quarter of last year fueled concerns that the Fed will keep rates at current levels, or even boost them, which would pressure stock valuations.
The Dow Jones Industrial Average was up 0.13% at 12,539.65 in early afternoon trade shortly before the Fed decision.
The broad S& P 500 index reversed early weakness to gain 0.06% to 1,427.97, while the tech-heavy Nasdaq Composite gained 0.19% to 2,443.96.
European stocks fell for the first time in three days after sales at Vivendi SA missed analysts' estimates and a surge in oil prices hurt automakers.
The Dow Jones Stoxx 600 Index lost 0.5% to 372.72 at the close in London. The Stoxx 50 slipped 0.6%, while the Euro Stoxx 50, a measure for the 13 nations sharing the euro, declined 0.4%.
National benchmarks slid in 11 of the 18 western European markets. The UK's FTSE 100 retreated 0.62% to 6,203.10. Germany's DAX added less than 0.1% while France's CAC 40 benchmark fell 0.7%.
China's stocks tumbled, leading declines in Asia, after lawmaker Cheng Siwei said the nation's shares are overvalued, adding to speculation the government will step up efforts to slow fund inflows. China Vanke Co. dropped.
The Shanghai and Shenzhen 300 Index plunged 6.5%, the biggest slump since the measure was created in April 2005. The Morgan Stanley Capital International Asia-Pacific Index lost 0.6% to 140.21 in Tokyo. Japan's Nikkei 225 Stock Average lost 0.61% to 17,383.42. Australia's S&P/ASX 200 Index fell 0.7% from a record. Stock benchmarks also declined around the region, except in New Zealand, Malaysia, the Philippines, Thailand and Pakistan.
The dollar fell the most against the yen in more than two months after US Treasury Secretary Henry Paulson said he will be watching the Japanese currency "very carefully."
The US currency declined from a four-year high versus the yen reached this week. The dollar fell to 121.01 yen at midday trade in New York from 121.63 Tuesday. The US currency also traded at $1.2998 against the euro from $1.2970.
Crude oil surged, approaching $58 a barrel in New York, on speculation that US fuel demand will jump because of increased economic growth and cold weather.
Crude oil for March delivery rose 0.7% to $57.39 a barrel at midday on the New York Mercantile Exchange. Futures touched $57.80, the highest since January 4. Prices are 15% lower than a year ago.
Gold in New York rose on speculation the dollar will weaken against the euro, boosting the appeal of the precious metal as an alternative investment.
Gold futures for April delivery rose 1.5% to $659.90 an ounce at midday on the Comex division of the New York Mercantile.