He hopes that the Gaza ceasefire will boost the region’s government bond markets

By Mark Jones

LONDON (Reuters) – Hopes of a ceasefire to end the war in Gaza lifted the region’s government bond markets and the Israeli shekel on Tuesday as investors took a breather after 15 months of conflict.

Negotiators were meeting in Qatar to finalize a ceasefire and arms embargo after US President Joe Biden signaled that one was within reach.

After more than six hours of talks, there has been no result yet, but the ties between Israel and Lebanon, Egypt and Jordan are building optimism.

The Israeli shekel and the Egyptian pound were also fractionally higher in the foreign exchange market.

The conclusion of the ceasefire will mark a historic few months in the Middle East.

They include Israel’s assassination of Hamas leader Yahya Sinwar, the weakening of Iran-backed Hezbollah enough to allow Lebanon to elect a new president, and perhaps most dramatically, the ousting of Syria’s veteran leader, Bashar al-Assad.

Marten Bresel, portfolio manager and rate trader at FIM Partners, said the combination of events is helping to boost sentiment in the region after a difficult two years.

“The cease-fire agreement is part of that, and hopes are high that the new Syrian government will open up the country more to the West,” he said.

Lebanon remains the biggest business for investors.

Arrests have increased over the past few months in hopes that nearly two years of total political paralysis could begin to resolve the current dire financial crisis.

Israeli markets bear the scars of the 15-month conflict in Gaza. The heavy spending caused by the fighting has caused the country’s sovereign credit rating to fall several times, though not before last year.

(Reporting by Mark Jones; Editing by Gareth Jones)