Israel’s 10-year government bonds dropped for a third day as concern escalating political unrest will threaten the region’s stability spurred demand for safer assets. The shekel advanced. The yield on the benchmark notes increased to the highest level in more than a year as Libya’s opposition leaders called for international air strikes against Muammar Qaddafi’s forces. Israeli Defense Minister Ehud Barak held talks with U.S. advisers Dennis Ross and Frederick Hoff on unrest in the Middle East and Africa, his office said today. “As the turmoil in the Middle East continues with no change in sight, investors are continuing to sell,” said Effi Cohen, a bond trader a Leader Capital Markets Ltd. “We expect yields to remain as high and possibly rise as long as the geopolitical situation is uncertain.” The yield on the 5 percent Mimshal Shiklit bond due January 2020 climbed two basis points to 5.15 percent as of 1:47 p.m. in Tel Aviv, the highest level since January 2010. The shekel strengthened 0.4 percent to 3.6069 against the dollar. The currency earlier appreciated to 3.6018, the strongest level since Feb. 21. U.S. Defense Secretary Robert Gates said that setting up a no-fly zone over the north African country to prevent attacks on regime opponents, have consequences that need to considered carefully. To contact the reporter on this story: Sharon Wrobel in Tel Aviv at swrobel4@bloomberg.net To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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