CORRECTED-Political crisis pushes up yield on Egypt T-bills

Reuters Middle East

(Corrects comparative figure for 266-day bills)

CAIRO, Nov 25 (Reuters) - Yields on Egyptian treasury bills

rose on Sunday after a flare-up of political unrest dashed hopes

for stability since Islamist President Mohamed Mursi's election

in June.

A decree issued on Thursday by Mursi to widen his powers and

shield his decisions from judicial review triggered a political

crisis and street protests that have left more than 500 people


"The market had priced in a lot of optimism over the past

few months, and the incidents that took place over the weekend

completely wiped that out," said Youssef Kamel, a fixed-income

analyst at Rasmala.

The average yield on 1.5 billion Egyptian pounds ($246.35

million) of 91-day T-bills rose to 12.494 percent from 12.299

percent at an auction last week, while that on 3.5 billion

pounds of 266-day bills climbed to 13.190 percent from 12.953

percent at an auction two weeks ago.

The central bank sold all 5 billion pounds of T-bills that

were on offer, it said. Yields on 91-day bills had gradually

been declining from above 14.75 percent before Mursi was elected

in June.

On Tuesday, Egypt signed a preliminary agreement with the

International Monetary Fund for a $4.8 billion loan, a step seen

as seal of approval to the government's economic programme and

vital to shoring up the country's finances.

Mursi's Muslim Brotherhood supporters were expected to turn

out again on the streets in a show of support for the

president's decree after prayers on Sunday afternoon. More

violence is feared as both they and Mursi's opponents are

planning massive demonstrations on Tuesday.

"The president's decisions have created further divisions in

the country, which could have severe consequences going forward,

especially since these decisions have created conflict with the

judiciary authority," Kamel said. "Political uncertainty is back

near its highest levels."

Egypt's main share index plunged 9.5 percent on

Sunday to its lowest since July 31 in the first trading session

since Mursi ignited the political crisis.

The falls were the index's biggest decline since March 2011,

when the market reopened after the popular uprising that ousted

Hosni Mubarak.

($1 = 6.0890 Egyptian pounds)

(Reporting by Patrick Werr; Editing by Sophie Walker)

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