Bloomberg News

Israel, Egypt Lead Mideast Drop on Embassy Attack, Global Slump

September 11, 2011

Sept. 11 (Bloomberg) -- Israel’s stocks fell to a two-year low and Egyptian shares dropped on concern over Europe’s debt crisis and as tensions between the Middle Eastern states rose after protesters attacked the Israeli embassy in Cairo.

Ampal-American Israel Corp., which has a stake in the company that supplies gas from Egypt to Israel, fell to the lowest level on record. Orascom Construction Industries, Egypt’s biggest publicly traded builder, lost 1.7 percent. The TA-25 Index slumped 3.6 percent to 1,024.93, the lowest since November 2009, at the 4:30 p.m. close in Tel Aviv. The EGX 30 Index declined 1.3 percent, the most since Aug. 21. In the Persian Gulf, the Bloomberg GCC 200 Index declined 0.2 percent.

Israeli stocks declined after “overseas markets fell over the weekend and also because of geopolitical events such as what happened in Egypt,” Terence Klingman, head of research at Meitav Brokerage in Tel Aviv, said by telephone. “People are preferring to buy government bonds and stay away from equities.”

Israel’s Prime Minister Benjamin Netanyahu told his nation last night that the embassy incident had damaged “the fabric of peace” between the two countries while declaring his commitment to the 32-year alliance. Since the February ouster of President Hosni Mubarak, there have been increasing calls by many Egyptians to end the peace treaty between the nations. Egypt’s ruling military council declared a state of emergency to restore order after the protesters attacked the embassy.

Persian Gulf

Ampal slumped 8.1 percent to 1.286 shekels, the lowest since the shares began trading in Tel Aviv in August 2006. Orascom Construction fell the most since Aug. 21 to 239.73 Egyptian pounds.

In the Persian Gulf, the DFM General Index lost 0.5 percent to 1,473.46, the lowest since Aug. 25. Abu Dhabi’s measure declined 0.2 percent.

“Equities in the Middle East continue to track global markets and the current backdrop does not provide any buying conviction,” said Julian Bruce, equity sales head at EFG-Hermes Holding SAE in Dubai.

European stocks tumbled last week after European Central Bank President Jean-Claude Trichet on Sept. 8 said threats to the euro region worsened. The STOXX Europe 600 Index slumped 3.7 percent. Oil for October delivery retreated 2 percent Sept. 9 to $87.24 a barrel on the New York Mercantile Exchange. Gulf Arab oil exporters, including the United Arab Emirates and Saudi Arabia, supply about a fifth of the world’s oil.

Oman’s MSM 30 Index fell 0.4 percent, while Qatar’s QE Index gained 0.1 percent and Kuwait’s gauge rose 0.3 percent. Bahrain’s BB All Share Index and Saudi Arabia’s Tadawul All Share Index were little changed.

Israeli government bonds rose, with the yield on the benchmark 5 percent Mimshal Shiklit notes due January 2020 dropping five basis points, or 0.05 percentage point, to 4.46 percent. Standard & Poor’s lifted Israel’s foreign-currency credit rating by one level to A+, the fifth-highest investment grade, on Sept. 9, citing economic growth and prospects for lower debt.

-- Editors: Claudia Maedler, Susan Lerner, Linda Shen

To contact the reporters on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net; Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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