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Tel Aviv stocks reversed trend to end Tuesday with losses after UBS Warburg wrote a scathing report on the banks, and Nasdaq futures indicated drops to come.

Israeli investors were also concerned about reports that the Palestinians may be announcing an independent state within days. Also, Israel is on high alert for more terrorist attacks.

Trade was sluggish on total turnover of NIS 246 million. The Maof-25 index finished down 0.7% at 391.6 points and the TA-100 index lost 0.6% at 374.9 points. Tech stocks ended flat with a positive bias.

Attention focused on Koor Industries (Nasdaq:KOR), which lost morning gains and finished down 1.5% on profit-taking after 16% gains over two days. Koor has been boosted by its holding in ECI Telecom (Nasdaq:ECIL), which has soared 90% in recent weeks.

Another ECI shareholder (14.6%) is Clal Industries, which began with a jump but spiraled south to finish 2.5% down.

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Action picked up in bank stocks after UBS Warburg cut forecasts for Hapoalim, Leumi and First International Bank of Israel and envisioned growing provisions to come, due to the deteriorating economic situation. The analysts rated all a Hold, but recommended overweighting Hapoalim vs Leumi.

Hapoalim ended unchanged on NIS 37 million turnover, Leumi lost 1.1% on NIS 42 million turnover ¿ the day's record, while FIBI5 of the First International slid by 0.7%. Mizrahi and Discount, unmentioned in the UBS report, ended down about 1%.

Elbit Systems (Nasdaq:ESLT) fell 1.1% after opening on a negative arbitrage gap of 1%. The company today reported a 13% rise in Q3 revenues to $188 million and a shift to profit of $11.3 million, compared with losing $48.7 million in the parallel. But its net missed analyst forecasts by 2 cents, coming in at 33 cents per share.

The Sadot oil exploration company shot up 21.4% after reporting signs of natural gas in a drill off the Haifa shore, in the Asher Yam Tzafon permit area. More specifically, repeat analysis of tests done in 1994 to 1999 indicated the existence of gas. Sadot owns 84% of the rights to the permit area, which is 20 kilometers from the Haifa shoreline.

Engineering firm Baran Group rose 2.1% after confirming the report in that it is about to sign a deal with Nokia to set up a joint venture in Germany.