Netanyahu tries to stem sales rush in bonds, funds

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JERUSALEM — Prime Minister Benjamin Netanyahu scrambled to shore up a plummeting bond market last week amid a rush on sales of long-term savings plans and provident funds.

Netanyahu urged Israelis to "consider things coolly" and issued a government guarantee to provide a safety net for state bonds.

Soon after, the Bank of Israel announced it would buy millions of dollars of bonds to help banks raise cash and meet growing public demands to cash in savings plans.

The government is committed "to take whatever necessary means to ensure that the bonds always enjoy support," Netanyahu told Israel Radio.

The bank said in a statement Thursday of last week that it would buy about $250 million in government bonds.

Netanyahu's remarks came after a record number of sell orders Wednesday of last week, which totaled about $500 million.

Capital-market analysts blamed the deterioration in the bond market on recent negative provident fund yields of between 1.5 percent and 3 percent.

One analyst said Finance Minister Dan Meridor's comments that the "capital market is sick" caused even more panic.

"The public has lost its confidence in the capital market. People feel that if they do not exit the market now, they are likely to lose all their money," said one trader.