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Inflation, global stock decline hit Egypt's bourse

CAIRO - Concerns about inflation and the decline in global stock markets dragged Egypt's benchmark CASE 30 index to its lowest in more than nine months on Monday, traders said.

The index skidded 2.18 percent to 8,950.72 points, its lowest close since Oct. 22, 2007, and traders said it was poised to drop further in the short-term after breaking 9,000 points.

The Hermes index shed 2.13 percent to 775.60 points, while the broader CIBC-100 index fell 3.47 percent to 431.49 points.

"Breaking the 9,000-point level sparked panic among people," said Mohamed Fouad, managing director of Global Capital. "Yesterday's closing prices indicated we were heading this way."

Mohamed Ashmawi of CIBC brokerage said: "This is mostly retail selling by Egyptians and Gulf Arab investors. Foreigners are still net buyers in the market."

Commercial International Bank (CIB), Egypt's largest listed lender by market value, fell 3.61 percent to 48 Egyptian pounds ($9.03) a share despite news the Dubai Capital Group has bought a 5.24 percent stake in the bank.

Orascom Construction Industries fell 0.62 percent to 380.11 pounds despite announcing that its United Arab Emirates Joint Venture BESIX was awarded a contract to construct and operate two new wastewater treatment plants.

"The sentiment is very bad. One or two companies won't help the market. This is about the sentiment towards Egypt," said Teymour el-Derini of Beltone Financial.

"The whole economic picture does not look good compared to last year. Inflation is through the roof ... we are seeing a lot of money going elsewhere."

Rising food and fuel prices drove urban inflation to 20.2 percent in the year to June, a 19-year high. Economists have also predicted that inflation will drag down real economic growth in the current fiscal year to between 4.8 and 6.8 percent, below the government's target of above 7 percent.

But Ashmawi of CIBC brokerage said market fundamentals were strong enough for a rebound before or during the Muslim holy month of Ramadan, which starts at the beginning of September. ($1 5.31 Egyptian pounds)