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Tel Aviv blue chips dive 4% late noon Tuesday on growing fears of escalation into regional war

TASE reels after PM Ehud Barak says talks with Palestinians won't resume as long as terrorism persists

Leading indices in Tel Aviv are down sharply at late noon on high volume, following Monday's escalation in hostilities.

The TA-100 index is down 3.7% to 467.19 points, the Maof-25 index is sliding 3.81% to 482.41 points and the Tel-Tech technology index is off a steeper 4.37%.

Total turnover is high compared with December levels, at NIS 233 million. Word on the market was that the decline in share prices was directly due to the escalation in hostile actions between the Palestinians and Israelis. There is growing concern that this situation will kill negotiations between the sides.

After a car bomb wounded more than 50 Israelis in Netanya on Monday, Prime Minister Ehud Barak said that it would be impossible to reach an agreement with the Palestinians before the end of United States President Bill Clinton's term.

Barak today said that the negotiations with the Palestinians have ceased completely and will not resume as long as terrorist attacks persist. Barak also told the army to prepare for the possibility of all-out regional war.

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Bank Hapoalim is down 2.9% on turnover of NIS 18.5 million, the session's highest volume so far. National phone carrier Bezeq is down 2.8% on NIS 17 million.

Nice Systems (Nasdaq:NICE) is beating the trend with a 0.7% gain on NIS 7 million volume. Yesterday Nice gained 1.4% after losing more than 60% in December on the company's fourth-quarter earnings warning.

Oil shares are weak this morning. Isramco participation units are getting hammered, losing 9.7% on volume of NIS 5.7 million. The company announced on Sunday that it is abandoning its offshore exploration west of Netanya. Isramco stock has lost 25% in the last two trading days.

Avner participation units are down 12.5% after a spate of recent gains.

The Israel Corporation is losing 5.9% on NIS 1.7 million after Harel Capital Markets coldly rated it a Hold. Clal Industries is down 5.2% on NIS 6.3 million after Bank Hapoalim downgraded Clal Industries to Hold.