UPDATE 1-Israel Chemicals to buy back up to $1 bln of shares

(Adds details, share price, background)

TEL AVIV, Sept 4 (Reuters) - Israel Chemicals (ICL) (ICL.TA) said on Thursday its board approved a buyback of up to 5 percent of the company's shares, worth $1 billion at the current market price.

The buyback will extend until June 30, 2009, the fertiliser and specialty chemicals maker said in a statement.

A company spokeswoman said this was the largest buyback ever in Israel.

ICL shares jumped 3.2 percent to 54.89 shekels in early trade.

"The board's decision demonstrates confidence in the company," ICL said in a statement. "The board believes the buyback of company shares in the current circumstances is justified and worthy, considering the company's financial results."

ICL, the second-largest company on the Tel Aviv bourse by market value, reported record second-quarter sales of $2.08 billion and net profit of $703 million.

Though its shares are up 10.5 percent since the start of 2008 -- boosted by soaring demand and prices for fertilisers -- they are off 31 percent from a peak of 80.07 shekels reached in June.

ICL is controlled by holding company Israel Corp (ILCO.TA). ($1 = 3.59 shekels) (Reporting by Tova Cohen; Editing by David Holmes)