Israeli shares dropped Monday on concern tensions may escalate after at least nine people were killed as commandos clashed with pro-Palestinian activists on ships carrying humanitarian aid supplies to Gaza.The benchmark TA-25 Index closed 1.6 percent lower at 1,082.74, the biggest drop since May 25, led by declines in Oil Refineries and Makhteshim-Agan Industries. The shekel weakened 1.5% against the dollar to 3.8742 at 5:42 p.m. in Tel Aviv. The cost of insuring Israel’s sovereign debt from default fell, according to prices from CMA DataVision in Asia.“The clash creates bad sentiment and there are fears this might escalate to a violent intifada,” said Daniel Rapoport, head of trading at Excellence Nessuah Investment House.Industry, Trade and Labor Minister Binyamin Ben-Eliezer, speaking in Qatar, said it was too early to determine the effect the incident would have on ties with Turkey.Turkey’s ISE National 100 Index of stocks dropped for the first time in four days, retreating 1.5%. The lira and Turkish bonds also fell.Trade between the two countries totaled $2.5 billion and reached about$753 million in the first quarter, according to statistics releasedMonday by the Israel Export and International Cooperation Institute.Turkey is Israel’s 10th-largest trading partner, according to thee-mailed statement.“Investors are concerned that this incident could prompt more tensions,adding to the already tense relations with the US and worries overIranian nuclear ambitions,” said Doron Levi, head of the dealing roomat Mizrahi Tefahot Bank. “There is an initial worry that this couldhave an impact in our economy.”“We do not project the clash will lead to any economic implications,not to tourism nor to export,” said Elah Alkalay, vice president ofbusiness development at IBI, a Tel Aviv-based brokerage.Israel’s benchmark Mimshal Shiklit note due February 2019 slid NIS 0.03 to NIS 111.47. The yield rose to 4.6%.Israeli credit-default swaps declined 1.3 basis points to 113.5 basis points, CMA prices in Seoul showed earlier Monday.Credit swaps pay the buyer face value if a borrower fails to meet itsobligations, less the value of the defaulted debt. A basis point, or0.01 percentage point, equals $1,000 annually on a contract protecting$10m. of bonds or loans.