Thursday, January 05, 2006

Sharon's condition roils Israeli markets


Israeli financial markets were roiled on Thursday by news that Prime Minister Ariel Sharon was fighting for his life in a Jerusalem hospital.

The shekel seesawed throughout the morning, sinking 1.6 percent against the dollar in early trading, then rising 0.7 percent as investors sold strong dollars, only to fall again by about 1.5 percent on renewed fears concerning Sharon's condition, said Yossi Frank, marketing manager at the First International Bank of Israel's foreign currency trading room.

The Tel Aviv Stock Exchange's blue chip TA-25 index, which plunged as much as 6.2 percent in extremely heavy trading, was less volatile, though down a more moderate 5.3 percent by midday.

"I think the political uncertainty will dominate (the markets) in the next few days," said Koby Akai, head of the economics department at Meretz Investments Ltd. in Tel Aviv. "But in the end, regrettable as it may be, every person has a replacement, and the state of Israel and its economy are strong."

Acting Prime Minister and Finance Minister Ehud Olmert and Bank of Israel Governor Stanley Fischer agreed that the country's fiscal and interest policies would remain unaffected by Sharon's illness, the prime minister's office said in a release apparently intended to reassure investors.

Sharon suffered a major stroke late Wednesday, and after seven hours of emergency surgery to stop cerebral bleeding was transferred to the intensive care unit of Hadassah hospital.