TheChek News Flow

Netanyahu orders Gaza ground offensive

A Palestinian woman reacts next to debris in her house, which police said was targeted in an Israeli air strike, in Gaza City July 17, 2014. Israeli shelling killed four Palestinian boys on a Gaza beach on Wednesday, an incident the military called tragic, and Israel and Hamas said they would cease attacks for five hours on Thursday for a humanitarian truce requested by the United Nations. Palestinian militants fired more than 130 rockets into Israel on the ninth day of a war in which Israeli attacks have killed 216 Palestinians, including six in two air strikes on Wednesday. Most of the casualties were civilians, health officials in Gaza said. In Israel, a civilian has been killed by one of more than 1,000 Palestinian rockets fired and more than half a dozen people have been wounded. REUTERS/Mohammed Salem (GAZA - Tags: POLITICS CIVIL UNREST CONFLICT)©Reuters

A woman looks at debris in her house, which police said was targeted in an Israeli air strike, in Gaza City

Israel said on Thursday evening that it had launched a ground operation in the Gaza Strip, escalating its 10-day-old war with Hamas into a new phase that it said it might expand even further if need be.

The Israeli military bombarded the northern Gaza Strip in attacks that lit up the night sky as naval vessels fired at the Palestinian territory from the sea.

The escalation came after a brief five-hour humanitarian pause in fighting on Thursday, which was followed by a return to heavy Israeli shelling that health officials said killed five children and pushed the death toll from Operation Protective Edge above 235.

Israel withdrew from Gaza in 2005, and its decision to move troops into the territory for the first time since 2009 came after intense domestic pressure on Prime Minister Benjamin Netanyahu to launch a ground war to stop rocket fire into Israel from Hamas and other militant Palestinian factions. On Thursday evening, Gaza militants fired more rockets into Israel, sending sirens sounding in Tel Aviv and other cities in Israel’s coastal heartland and south.

Israeli military experts say that a ground operation would be necessary to root out the militants’ extensive tunnel and bunker systems. On Thursday morning, the Israel Defence Forces said it had foiled an attempt by 13 Hamas fighters to enter a border area near a kibbutz via a tunnel burrowed under the buffer zone.

“We started a ground operation against the tunnels – the sort of tunnel we saw this morning,” a senior Israeli official said. “The army is ready if need be to expand the ground operation.”

Five more Palestinian children were killed on Thursday as a result of Israel’s military operations, health officials there said, as the two sides intensified their hostilities.

Gaza health officials said that three children were killed in an Israeli air strike in south Gaza City. Al-Aqsa television broadcast footage of the children’s bodies on display alongside weeping relatives.

A four-year-old girl was also reported killed by a second air strike in Khan Younis in the southern Gaza Strip, and a fifth child died from injuries sustained earlier this week, officials said. According to Unicef, the UN children’s agency, at least 48 children have now died during the Israeli operation, dubbed Protective Edge, aimed at weakening the militant group Hamas.

The deaths came a day after four boys were killed in Gaza City’s port in a beachfront air strike witnessed by several journalists that produced gruesome images broadcasted around the world. The boys’ deaths intensified international calls for a ceasefire.

Both Israel and Hamas agreed to hold fire during Thursday’s “humanitarian window”, but Israel’s military said that Gaza militants fired mortars into the southern border region during the pause, and later barraged southern and central Israel with rockets that caused sirens to sound in several cities.

After 3pm Israeli drones returned to the skies over Gaza as its military resumed heavy bombardment.

During the 10am-3pm pause in fighting, the UN and other aid agencies set to work repairing Gaza’s damaged water and power facilities, while Palestinians emerged from houses or makeshift shelters to shop or withdraw money from automatic teller machines.

The International Committee of the Red Cross said that during the pause it had fixed a water pipeline, serving 150,000 people, that had been contaminated by sewage.

Several municipal workers in Gaza have been killed in Israeli strikes during Operation Protective Edge over the past week, the UN and ICRC said, causing others to stay home from work and the territory’s water utility to suspend activities.

Gaza’s public services were in serious crisis before the war began; over the past week, humanitarian organisations warned that without repairs to its water system, some taps in Gaza would run dry.

The UN’s Palestinian refugee agency, UNRWA, said that it found 20 rockets stashed by militants during an inspection of one of its empty schools in Gaza.

The agency employs tens of thousands of Palestinians in Gaza and the West Bank and is a frequent target of criticism by rightwing Israeli politicians. It said it “strongly condemned” the incident. Israel has accused Hamas and other militant groups of using civilian buildings to conceal military operations, while Israel has been accused of targeting civilians.

Israel and Hamas both denied reports of progress in talks to agree a ceasefire that would end the violence, which is their third conflict since 2008.

“The diplomatic effort continues, and we’re not there yet,” said an Israeli official. Israel wants to see a diplomatic solution that would involve Palestinian President Mahmoud Abbas, whose Fatah movement formed a unity government with Hamas last month, as a partner.

Mr Abbas held talks in Cairo with representatives of Hamas and fellow militant group Islamic Jihad. “There has been talk about details of a ceasefire or the aftermath of a ceasefire, but so far nothing has materialised,” a Palestinian official said, adding that Mr Abbas would visit Turkey and the Gulf in his diplomatic push.

Hamas and Islamic Jihad have set a series of conditions for a ceasefire, including the release of Hamas detainees rounded up after three Israeli teenagers were kidnapped and killed. They also want Israel to lift controls on the import of goods into Gaza, and to put the Rafah border crossing with Egypt under international supervision.

Airline Confirms It Lost Contact With MH17 Over Eastern Ukraine

The site of the Malaysia Airlines plane crash near the village of Grabovo, Ukraine, on Thursday. Associated Press

A Malaysia Airlines 3786.KU -2.17% plane carrying 295 passengers and crew came down Thursday while flying over the battle-torn east Ukraine region of Donetsk, after it was hit by what U.S. intelligence agencies said was a surface-to-air missile.

The intelligence sources didn't say whether the missile was fired by Ukrainian forces or pro-Russia separatist rebels.

Malaysia Airlines said contact was lost with Flight 17 about 50 kilometers (30 miles) from the Russia-Ukraine border. The Boeing BA -1.21% 777 departed from Amsterdam around noon on Thursday and was due to arrive in Kuala Lumpur early Friday.

Ukraine's state air-traffic control service confirmed the flight had crashed and said a special investigation commission has been rushed to the scene.

The plane went down near the village of Hrabove in the Donetsk region while flying at a height of about 10,000 meters (32,800 feet), according to Anton Gerashchenko, an adviser to Ukraine's Interior Ministry.

The crash immediately sparked speculation about the cause. For months, Ukrainian forces have been trying to subdue pro-Russia separatists who seized towns across the region in April and declared an independent republic. The fighting escalated this week when Ukrainian authorities reported that one of its military cargo planes and one of its military fighter jets had been downed in the area.

The disaster comes as a new trauma for Malaysia Airlines, the carrier already at the center of a global mystery over the disappearance of one of its flights in March, another Boeing 777 that went missing en route from Kuala Lumpur to Beijing.

Footage captured by locals from the wreckage site showed a massive grey plume of smoke emerging from a field before sunset. Subsequent images pictured Ukrainian emergency forces hosing down the wreckage, as well as passports, tickets and pieces of bodies found in tact near the crash site.

The war of accusations kicked off immediately after the crash. In a phone call with The Wall Street Journal, Mr. Gerashchenko alleged that pro-Russia rebels had set up a ground-to-air missile battery near the Russian border by the town of Snizhne.

"They clearly thought that it was a military transport plane that they were shooting at," he said. "They were the ones who did this." His claims couldn't be verified.

In a Facebook post, Mr. Gerashchenko alleged that the separatists had obtained a Buk surface-to-air missile system that he said locals saw them parading near the towns of Snizhne and Torez during the day on Thursday. He said a convoy with the anti-aircraft missile was seen heading toward Shakhtarsk, a town not far from the crash site, about an hour before the plane went down late Thursday afternoon.

In late June, separatist leaders told the Russian news outlets RIA Novosti and Interfax that they had taken control of a Ukrainian air-defense base near the village of Oleksiivka equipped with Buk missiles. The Donetsk People's Republic also posted a photo of the missiles, sometimes known as Gadfly systems, on its official Twitter feed at the time, declaring a victory in having seized the weaponry.

But on Thursday, separatist leaders denied that they had surface-to-air missiles such as the Buk system that were powerful enough to shoot down a Boeing 777 flying at such a height.

Sergei Kavtaradze, one of the leaders of the separatist Donetsk People's Republic, accused Ukrainian forces of having shot down the plane.

"The plane was shot down by the Ukrainian side," he told the Interfax news agency. "We simply don't have those kind of air defense systems."

Ukraine's president and prime minister didn't immediately assign blame for the incident.

Prime Minister Arseniy Yatsenyuk ordered a special investigation into the crash, as well as the downing of a Ukrainian AN-26 military cargo aircraft and a Ukrainian SU-25 fighter jet in the same area earlier this week.

"This is the third tragic incident in recent days after the AN-26 and SU-25 were shot down," Ukrainian President Petro Poroshenko said in a statement. "We can't rule out that this plane was also shot down, but we underscore that the Ukrainian armed forces were not carrying out any actions to strike airborne targets."

If a passenger jet was shot down over Ukraine, attackers would have had to use a sophisticated surface-to-air missile system, not the shoulder-fired weapons that are more accessible and easier to use.

Those weapons, nicknamed manpads, have been used in attacks against commercial aircraft in the past. But their rangedoesn't approach the 30,000-foot cruising altitude of passenger jets.

The Federal Aviation Administration said that Ukraine had advised pilots on Monday not to fly over the conflict zone in eastern Ukraine at altitudes between 26,000 and 32,000 feet—a height that Flight 17 appeared to have been exceeding before it crashed.

Under a codeshare agreement between Malaysia Air and the Dutch airline KLM, the downed flight was also flying as Flight KL4103. Dutch public broadcaster NOS reported that at least 55 Dutch citizens were on board the plane, based on early estimates of domestic travel agencies. Relatives of passengers gathered late Thursday at a restaurant in Amsterdam's Schiphol Airport to be briefed by officials. The people were escorted by security officers and couldn't be approached for comment.

French Foreign Minister Laurent Fabius said at least four French citizens were on board Flight 17. Air France, AF.FR -1.45% KLM, Lufthansa LHA.XE -2.37% and Air India announced that they would no longer route planes over the contested regions of eastern Ukraine. The FAA said U.S. airlines had also agreed to avoid the region.

Mr. Poroshenko expressed condolences to the relatives of those killed and said Ukrainian authorities were engaging in all possible rescue efforts.

Russian President Vladimir Putin expressed his sympathies to the prime minister of Malaysia for the crash over Ukrainian airspace, according to a statement published on the Kremlin's website.

"The Russian head of state asked to convey his most sincere words of sympathy and support to the families and friends of the victims," the Kremlin said. In 2001, the Ukrainian military mistakenly shot down a commercial passenger jet that was en route from Tel Aviv to Novosibirsk with a land-to-air missile that was fired during a military exercise. All the 66 passengers and 12 crew members on board the plane were killed in the blast.

In Malaysia, Prime Minister Najib Razak expressed shock and said the government was launching an immediate investigation into the incident.

- Determined to reject the partial tender offer from Kindred Healthcare, Inc. to acquire 14.9% of the outstanding shares of Gentiva for a price of $16.00 per share in cash (the "Offer"). The Board determined that the Offer significantly undervalues Gentivas shares, is coercive and not in the best interests of Gentiva stockholders. Accordingly, the Board recommends that Gentiva stockholders reject the Offer and not tender their shares into the Offer. 

In addition, the Board said it has received today a proposal from a recognized owner, operator and investor in the sector to acquire all of the outstanding shares of Gentiva common stock for $17.25 per share in cash (the Alternative Proposal). The Alternative Proposal is based on publicly available information and is subject to financing and due diligence, as well as final internal approvals and the execution of a definitive transaction agreement. The Board will review the Alternative Proposal carefully, in consultation with its financial and legal advisors, in due course. The Alternative Proposal was accompanied by support letters from major financial institutions, subject to customary conditions.

Reports Q2 (Jun) earnings of $1.37 per share, $0.02 better than the Capital IQ Consensus Estimate of $1.35; revenues rose 7.8% year/year to $12.05 bln vs the $11.95 bln consensus.

* Strong Schlumberger Q2 results were driven by significantly higher activity both offshore and in key land markets. Growth was strongest internationally as activity rebounded in a number of regions but North America was also markedly higher with strength offshore and extremely solid progress on land in spite of the Canadian spring break-up.

* All Areas and all Groups recorded growth, underpinned by the strength of our execution and the penetration of our new technology.

* Geographical results were led by Europe/CIS/Africa where Russia recovered markedly from the effects of a harsh winter and where Norway benefited from an active start to the summer seismic season.

* In Middle East and Asia, further growth from key markets in Saudi Arabia and Australia was amplified by stronger activity—both seismic and drilling—in the United Arab Emirates GeoMarket as well as growing seismic operations in Qatar.

* In North America, double-digit growth in US Land from increased rig count, efficiency gains and market share improvements more than overcame the effects of what proved to be a rapid spring break-up in Canada while offshore activity in the US Gulf of Mexico rebounded as rigs returned to drilling.

* Latin America benefited from strong growth in Argentina, Colombia and Venezuela but overall results were impacted by lower activity in Mexico, while revenue in the Brazil GeoMarket was flat sequentially.

The stock market finished the Thursday session on a lower note with the Russell 2000 (-1.5%) posting its third consecutive loss that took the small-cap index below its 200-day moving average (1140.82). For its part, the S&P 500 fell 1.2%, which represented the first move in excess of 1.0% over the past 63 trading days.

The benchmark index spent the entire session in the red with the early weakness attributed to concerns about the impact of the latest set of U.S. sanctions against Russia. The sanctions targeting two banks (Gazprombank and VEB), two energy companies (Rosneft and Novatek), and several defense contractors were announced shortly after yesterday's closing bell and they pressured markets in Europe as well.

Despite the lower start, the S&P 500 was on the brink of turning positive at the end of the opening hour, but slid to fresh lows after it was reported that a Malaysian Airlines jet, with nearly 300 passengers and personnel on board, crashed in Ukraine near the border with Russia.

After the initial reports crossed the wires, subsequent headlines indicated that the plane did not crash due to mechanical reasons, but instead, was shot down. One pro-Russian rebel group in the east denied having any involvement, while Ukraine's President Petro Poroshenko said that the country's army has not taken any action "against airborne targets" either.

With no clarity regarding who was responsible for bringing down the jet, airlines in France and Germany said they will avoid Ukrainian airspace, while the Federal Aviation Administration prohibited U.S. carriers from flying in the area as well.

Equities attempted an afternoon rebound, but fell to new lows during the last hour of action in reaction to reports indicating Israel has launched a ground offensive in Gaza.

The pair of worrisome reports ensured a lower finish for equities, while safe-haven assets like gold, Treasuries, and the yen rallied. Gold futures rose 1.5% to $1319.70/ozt, while Treasuries ended on their highs with the 10-yr yield down seven basis points at 2.46%. For its part, the dollar/yen pair fell to 101.25, less than 60 pips away from the lowest level of the year for the risk-sensitive pair.

All ten sectors ended in the red with influential cyclical groups like energy (-1.6%), industrials (-1.6%), and technology (-1.3%) finishing at the bottom of the leaderboard. The energy sector diverged from crude oil, which rallied 2.1% to $103.29/bbl, while the industrial sector saw weakness among airline stocks. Delta Air Lines (DAL 36.57, -1.30) and United Continental (UAL 43.35, -1.55) both lost near 3.5%, while the Dow Jones Transportation Average lost 1.4%.

Elsewhere, the tech sector was pressured by chipmakers as evidenced by a 2.5% decline in the PHLX Semiconductor Index. The high-beta group ended broadly lower after SanDisk's (SNDK 93.21, -14.62) cautious guidance overshadowed its above-consensus results.

Staying on the earnings theme, eBay (EBAY 51.03, +0.33) and SAP (SAP 80.68, +1.04) added 0.7% and 1.3%, respectively after beating bottom-line estimates.

While most sectors posted losses larger than 1.0%, materials (-0.5%) outperformed thanks to a boost from mining shares that sent the Market Vectors Gold Miners ETF (GDX 26.99, +0.71) higher by 2.7%.

Another big move took place in the CBOE Volatility Index (VIX 14.71, +3.71), which surged more than 33.0% off a depressed base to levels not seen since late April as participants rushed for volatility protection.

Despite the news-filled day, participation remained below average with 690 million shares changing hands at the NYSE.

Economic data included weekly initial claims, June Housing Starts and Building Permits, and the Philadelphia Fed Survey for July:

The initial claims level dropped to 302,000 from an upwardly revised 305,000 (from 304,000), while the consensus expected an increase to 311,000

After stabilizing in the 310,000 -- 320,000 range, the initial claims level has moved another leg down over the last couple of weeks. If these trends hold, we would expect to see monthly payroll growth close to 300,000

The continuing claims level fell to 2.507 million from an upwardly revised 2.586 million (from 2.584 million), while the consensus expected the level to fall to 2.563 million

Housing starts fell 9.3% in June from a downwardly revised 985,000 (from 1.001 million) in May to 893,000. The consensus expected an increase to 1.020 million.

The drop in starts brought new residential construction levels to their lowest point since 863,000 homes were started in September 2013

Concerning was the new downward trend in single-family construction. This sector tends to produce stable trends yet starts have now fallen precipitously in both May (-2.6%) and June (-9.0%). Construction levels for new single-family homes are at their lowest point since 569,000 homes were started in November 2012

The Philadelphia Fed's Business Outlook Survey strengthened in July, increasing to 23.9 from 17.8, while the consensus expected a decline to 23.9. That was the best reading since March 2011 with nearly all sub- indices showing significant improvement in July

Tomorrow, the Michigan Consumer Sentiment Index for July (consensus 84.0) will be released at 9:55 ET, while the Leading Indicators report for June (consensus 0.5%) will cross the wires at 10:00 ET.

S&P 500 +5.9% YTD

Nasdaq Composite +4.5% YTD

Dow Jones Industrial Average +2.4% YTD

Russell 2000 -2.6% YTD