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Egypt Tightens Security in Cairo to Prevent Rallies

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Jan. 27 (Bloomberg) -- Egyptian authorities banned protests and tightened security overnight to prevent demonstrators from repeating the rally of Jan. 25, when thousands took to the streets of Cairo and major cities to denounce President Hosni Mubarak, inspired by the revolt that toppled Tunisia’s leader.

Truckloads of riot police were deployed yesterday in central Cairo after demonstrations the previous day in which four people were killed. Security forces clashed with several hundred protesters and restricted access to Tahrir Square, the scene of the largest protests. Crowds had dispersed by the beginning of the working day today, when Egypt’s benchmark EGX30 index tumbled the most since October 2008.

“We believe tensions will likely intensify in the coming weeks and months as the presidential election campaign approaches,” JPMorgan Chase & Co. said today in a research note. “The population has sent a clear message to the government asking for political reform.”

Protests have erupted in the past month in several Arab countries including Algeria, Morocco and Yemen, which all face high unemployment rates and rising living costs, factors which fueled the uprising that ousted Tunisian leader Zine El Abidine Ben Ali on Jan. 14. Mubarak, in power since 1981, hasn’t said whether he will run in Egyptian elections later this year.

The EGX30 slumped 11 percent to 5,630.64 at 12.36 p.m. in Cairo. It lost 6.1 percent yesterday. The EGX 70 plunged 16 percent, the biggest drop since at least January 2008. Trading was suspended from 10:40 a.m. to 11:30 a.m. The pound retreated 0.3 percent to 5.8503 per dollar.

Egypt, home to Orascom Construction Industries, Talaat Moustafa Group Holding and Orascom Telecom, has the biggest stock market by market capitalization in North Africa.

Demonstrators Detained

One protester and a policeman were killed yesterday when they were hit by a car in Cairo, bringing the two-day death toll to six, the Associated Press reported. Earlier, three demonstrators died in violence in Suez and a policeman was killed in the capital.

Egyptian police detained 860 protesters during two days of anti-government demonstrations, AP said, citing officials who weren’t identified by name. About 2,000 people gathered late yesterday in central Cairo, with some saying the protests would continue. A Facebook page with more than 405,000 members that included a call for the Jan. 25 protests has an appeal for another mass gathering tomorrow.

“The continuation of demonstrations is something that the people will decide,” Abdel Rahman Youssef, one of the leaders of the National Association for Change, a sponsor of the protests, said by telephone yesterday in Cairo. “I think people will continue in a peaceful manner to seek their rights.”

U.S. Reaction

President Barack Obama’s spokesman, Robert Gibbs, said the U.S. supported the “universal rights” of Egyptian citizens and repeated calls for demonstrators and authorities to refrain from violence. The administration supports the right of “assembly and speech” for the Egyptian people, Gibbs told reporters aboard Air Force One yesterday as Obama traveled to an event in Wisconsin. He called Egypt a “strong ally” of the U.S.

The U.S. relies on Mubarak as a mediator in the Palestinian-Israeli conflict, and Egypt is the second-biggest recipient of American foreign aid after Israel. Relations were strained during the administration of President George W. Bush, who repeatedly called on Mubarak to allow more political freedoms.

Tunisian Parallels

Egyptian protesters have drawn parallels between their leader and Ben Ali, with some carrying Tunisian flags.

After 23 years in office, Ben Ali’s attempt to reassure Tunisians that there would be “no presidency for life” and that he wouldn’t seek re-election failed to quell the protests. He fled the country after a wave of demonstrations that accused his regime of corruption and human-rights violations.

Tunisia will seek the arrest of Ben Ali through Interpol on charges of illegally transferring money abroad, Justice Minister Lazhar Chebbi told reporters in Tunis yesterday.

“Tunisia sent a very powerful message,” Mohammed ElBaradei said in an interview in Vienna Jan. 25. “When Egyptians saw a country like Tunisia being able to do that, they realized that it is doable.”

Formerly head of the United Nations nuclear agency, ElBaradei now leads the National Association for Change and said in February that he’d run for president if the government removed constitutional restrictions on independent candidates.

Corruption Index

Egypt, Algeria and Yemen all rank in the bottom half, well below 59th-placed Tunisia, in Berlin-based Transparency International’s 2010 Corruption Perceptions Index of 180 nations. All Arab countries except Lebanon and Iraq are classified as authoritarian regimes in the Economist Intelligence Unit’s 2010 Democracy Index.

Thousands of Yemeni protesters gathered today outside the main university in the capital, Sana’a, to demand that the President Ali Abdullah Saleh step down.

Risks of global instability are rising as governments cut subsidies that help the poor cope with surging food and fuel costs to ease budget crunches, the head of the UN’s World Food Program said Jan. 25.

“We’re in an era where the world and nations ignore the food issue at their peril,” Josette Sheeran said in an interview at the agency’s Rome headquarters.

Succession Questions

The Egyptian government announced additional spending of as much as 3.5 billion pounds ($598 million) in October to cover the country’s rising food bill, increasing the strain on a budget deficit that widened to 8.1 percent of gross domestic product in the fiscal year that ended in June.

Mubarak, 82, without a designated successor, hasn’t publicly said whether he will run for re-election when his term ends this year. Opposition groups, including the Muslim Brotherhood, say the president is grooming his politician son, Gamal Mubarak, to succeed him, a claim both men deny.

Intelligence chief Omar Suleiman has been mentioned by analysts including the London-based Economist Intelligence Unit as a possible presidential contender.

When Mubarak underwent surgery to remove his gallbladder in March, investors dumped Egyptian shares. The benchmark EGX30 index lost 6.7 percent in a week.

In May, he criticized opposition demands for leadership and constitutional changes, saying they threatened the country with “the danger of setbacks.” He said there was “no place for those who confuse change and chaos.”

To contact the reporters on this story: Ahmed A Namatalla in Cairo at anamatalla@bloomberg.net; Alaa Shahine in Dubai at asalha@bloomberg.net.

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.

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