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International News Title: Mubarak Fails to Quell Protests as Turmoil Spreads to Yemen Feb. 2 (Bloomberg) -- Egyptian President Hosni Mubarak's pledge to step down later this year failed to appease opposition groups demanding an end to his 30-year rule as the unrest that started in the region one month ago spreads to Yemen. Hours after U.S. President Barack Obama told Mubarak that the transition needs to "begin now," Yemen President Ali Abdullah Saleh said today he won't seek to extend his term when it expires in 2013. The opposition plans more protests in Cairo this week, with some of the hundreds of thousands listening to Mubarak's speech in Tahrir Square last night shouting "your last day will be Friday." Central Cairo was calm this morning. "I expect the demonstrations to continue," said Khaled Fahmy, professor of history at American University in Cairo, in a telephone interview. "He really hasn't offered much. What I've seen is that he has burned bridges. There is no trust between him and the people." The unprecedented protests, which followed a revolt in Tunisia that ousted President Zine El Abidine Ben Ali on Jan. 14, have left more than 100 people dead in Egypt and roiled international stock, bond and oil markets. Political turmoil is spreading through the Middle East. Yemen's president called for a national unity government, Jordan's King Abdullah yesterday sacked his prime minister and in Algeria protesters have been killed in clashes with security forces. Opposition Leader Former United Nations atomic agency chief Mohamed ElBaradei, the Egyptian opposition's figurehead, told Al Arabiya television late yesterday that the only way Mubarak can restore stability is to resign. The yield on Egypt's 10-year dollar bond rose 2 basis point to 6.52 percent at 10:30 a.m. in Cairo, according to Bloomberg composite prices. It reached a record 7.21 percent on Jan. 31, the data show. Dubai's DFM General Index jumped 3.4 percent, the most since March. Egypt "faces a choice between chaos and stability," Mubarak said in the address late yesterday, wearing a dark blue suit and black tie and standing next to the national flag. "My first responsibility now is to restore the security and stability of the nation to achieve a peaceful transition." With presidential elections not due until September, Obama urged Mubarak to start the handover process quickly. Transition "An orderly transition must be meaningful, must be peaceful, and it must begin now," Obama said at the White House after phoning Mubarak following the Egyptian leader's speech. Directing his comments at young demonstrators calling for democracy, Obama said: "We hear your voices.' The political upheaval sent the debt tumbling 12 percent in January, the most since at least 2001, according to JPMorgan Chase & Co. The cost of protecting against an Egypt default with credit-default swaps rose 9 basis points to 350 today, CMA prices show. They climbed as high as 430 basis points on Jan. 28. "We are actually still relatively confident that Egypt will be able to continue serving its debt," Kai Stukenbrock, director of sovereign and international public finance ratings at Standard & Poor's, said in an interview. The central bank may increase interest rates to stem outflow of bank deposits and capital from the country, he said. S&P cut Egypt's credit rating a notch yesterday to two levels below investment grade. Suez Canal Oil rose 0.2 percent to $90.91 a barrel in New York after falling from a two-year high as concern eased that the protests in Egypt will disrupt supplies through the Suez Canal. Futures declined 1.5 percent yesterday after canal officials said traffic is moving normally at the waterway which carries more than 2.2 million barrels of oil a day. The opposition movement, which includes the Muslim Brotherhood and ElBaradei, accuses Mubarak of running a corrupt and repressive government and wants him to hand over to a transitional government right away. ElBaradei yesterday rejected dialogue with Mubarak's regime and said the president's departure won't create a power vacuum. Mubarak's concession comes a week too late, said Marwan Muasher, former deputy prime minister of Jordan and now a senior vice president at the World Bank in Washington. "I think people smell blood and they're not going to be satisfied with this," he said in an interview. Robert Satloff, executive director of the Washington Institute for Near East Policy in Washington, said Mubarak's offer suggests he still has support from the military leaders, though that may not last in the face of continuing protests. "I don't think he's going to get eight more months to be president," he said in an interview. Clashes in Alexandria In Alexandria, the army last night clashed with protesters and fired shots after the Mubarak address, Al Jazeera television reported. Protesters hurled stones and sought to block an army tank, it said. Mubarak has "no credibility" to oversee a transition and the U.S. should do whatever it can to support a shift to democracy there, including withholding financial aid if necessary, said Senator Patrick Leahy of Vermont, the Democratic chairman of the panel that controls foreign assistance, in a statement in Washington. Egypt received about $1.5 billion in U.S. assistance last year. It has been one of the biggest recipients of U.S. aid since 1979, after Egypt signed a U.S.-brokered peace treaty with Israel. Mubarak has backed efforts to encourage Arab acceptance of the Jewish state, oppose Iran's nuclear program and isolate Hamas, the Islamist militant group that controls the Gaza Strip. Stock Shutdown As Mubarak fought to retain power, his authorities shut down Egypt's stock market, after a 16 percent slump in the benchmark index last week, its banking system and most phone and Internet communication. Mubarak indicated the government would take steps to try to return the country to normal, including dispatching police to apprehend those responsible for arson and other illegal actions in the past week of turmoil. Banks may reopen to the public on Feb. 3 or Feb. 6, Finance Minister Samir Radwan, appointed by Mubarak on Jan. 31 as he revamped the Cabinet to appease protests, told Bloomberg Television yesterday. Queues of around 10 people were seen at ATMs in central Cairo today. Expatriates Flee Companies including Heineken NV and BG Group Plc have halted operations in the country of 80 million, and expatriates fled aboard scheduled flights, charters and private jets. Tanks have guarded key government buildings as thousands have rallied daily in Cairo and other cities. Egypt's economy needs foreign investment, along with tourism revenue, to achieve the 7 percent economic growth rates that the government says is necessary to create jobs for an expanding workforce. It achieved that in the three years before the global economic crisis slowed growth, to about 6 percent last year according to government estimates. "Tourists are currently trying to leave Egypt en masse," London-based risk consultant Maplecroft said in a report yesterday. The International Monetary Fund's October prediction that the economy will grow 5.5 percent this year "is now overly optimistic. A dramatic or even moderate reduction in growth will make it more difficult for the government to create new jobs," a key demand of protesters. Official figures put Egypt's unemployment rate at about 9 percent. Mubarak said yesterday he will change laws governing presidential term limits and the eligibility of candidates before the next election. The speech "did not address the inheritance of power to family members, it did not address amending the constitution to guarantee civil rights, it did not address lifting restrictions on political parties," said Ayman Nour, who challenged Mubarak in Egypt's first multi-candidate presidential election in 2005, and is among the leaders of the current opposition movement. It "did not live up to the people's demands." --With assistance from Mahmoud Kassem and Abdel Latif Wahba in Cairo, Zahra Hankir in Dubai, Julianna Goldman, Julie Davis, Nicole Gaouette, Viola Gienger and David Lerman in Washington, and Ben Sharples in Melbourne. Editors: Ben Holland, John Fraher.
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