(Bloomberg) -- Israeli stocks are heading for a five-day losing streak as the country intensifies its military campaign in Gaza, spooking investors hoping for an end to the war.

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The Tel Aviv Stock Exchange 35 Index fell as much as 2.3% on Tuesday, briefly posting the biggest losses in the world before paring the slide to 0.3%. The selloff came even as global stocks were extending their rally to a 10th day amid expectations for further Federal Reserve easing.

Investors and business leaders are warning of mounting economic costs as Israel launches a new offensive targeting Gaza City and images of widespread destruction stoke criticism even by countries friendly to Tel Aviv. Prime Minister Benjamin Netanyahu acknowledged his nation’s increasing isolation and vowed to make it self-sufficient to withstand any sanctions.

“The costs of endless wars on all fronts in terms of lost growth, emigration of human capital, worse international relations, greater domestic political polarization — and arguably — no better security all weigh on Israeli asset prices,” said Hasnain Malik, a strategist at Tellimer in Dubai. “PM Netanyahu’s latest speech that urges preparedness for more economic autarky reinforces those concerns.”

Tuesday’s equity losses spanned across sectors, with 18 of the benchmark gauge’s 35 stocks falling. Teva Pharmaceutical Industries Ltd. and Mizrahi Tefahot Bank Ltd. were the biggest drag.

Before the recent selloff, Israeli stocks had been among the world’s best performers this year, with the TA-35 index gaining 26% through Sept. 9.

Sentiment was also damped by economic data: Israel’s preliminary annualized figures for gross domestic product in the second quarter showed a drop of 4%, according to the Central Bureau of Statistics.

Business leaders have grown wary of the protracted conflict and called for a change of strategy. The Israeli Business Forum, whose members include the leaders of the nation’s largest companies, has said Netanyahu is pushing Israel into a dangerous and unprecedented economic and political slump.

“The government must urgently promote ending the longest war in Israel’s history, the release of all hostages, and a date for elections,” the forum said in a statement.

Technical patterns signaled that earlier gains had overheated the market. The relative strength index, an indicator of momentum on the equity benchmark, traded near a threshold often seen in overbought markets. Another signal called the moving average convergence-divergence witnessed a bearish crossover.

Israel’s other assets were mixed. The shekel was up, and sovereign dollar bonds were little changed.

(Updates market moves from the second paragraph, adds GDP figure in the seventh)

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