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Egypt benchmark stock index plunges for 3rd straight day on surging protests, fresh violence
CAIRO (AP) ' Egypt's stock market took a beating for the third consecutive day and the cost of insuring its sovereign debt soared as protests and violence in the capital raised questions about the country's stability days before pivotal parliamentary election.
The Egyptian Exchange's benchmark EGX30 index fell by almost 3.1 percent within minutes of the start of trade and extended its slide to 3.6 percent by midday, blowing past the 3,800 point level seen by brokers as a key support level.
The declines built on the previous day's 4 percent slide and dragged its year-to-date decline down to over 47 percent.
The losses marked the 10th consecutive trading session in which the market ' one of the worst performing emerging market indices in the world ' suffered a slide as a result of Egypt's tenuous political situation.
Egypt's five-year credit default swaps ' the cost of insuring its sovereign debt against default, climbed 25 basis points to 563 basis points, according to data service provider Markit.
With the first parliamentary elections since the ouster of President Hosni Mubarak slated for Nov. 28, the fourth day of clashes between demonstrators and security forces spotlighted the challenges the country faces as it tries to move toward a democratic system.
"We passed the support point, so the only thing that will stop further declines in the market is fixing the political situation in the country," said Khaled Naga, a senior broker with Mega Investments. "We have to wait and see what happens."
While far from presenting a united front, the activists massed in Cairo's Tahrir Square, which served as the epicenter of the Jan. 25 uprising that pushed Mubarak from power, are demanding either the military rulers immediately hand over power to a civilian administration or set a fixed date for a transition to civilian rule.
The days of unrest have proven deadly, with at least 29 killed across the country ' most in Cairo ' and the violence and continuing demonstrations prompted the civilian Cabinet to offer its resignation late Monday. But the move failed to appease the activists who see the civilian government as little more than subservient to the military rulers.
Firmly entrenched in Tahrir, the activists issued a call for a million-man demonstration, a move that had hundreds of people streaming into downtown Cairo and raising the scepter of further clashes and violence even as officials called for restraint from all sides.
But the promise of continued trouble only builds on already building political uncertainty that has battered the country's economy.
Naga said the stock market has lost about 180 billion pounds ($30.25 billion) since the start of the year ' with most of that linked to the unrest in the country versus the overall global financial concerns linked to the Euro-zone debt crisis and broader fears of recession.
"Yesterday, the losses were about seven billion (pounds) and today, I'm expecting the same if not more," he said.