* Growing tensions in Egypt lift oil
* World stocks fall for third straight day
By Dominic Lau
LONDON, Feb 11 (Reuters) - World stocks fell for the third
straight day on Friday partly on growing tensions in Egypt after
President Hosni Mubarak disappointed protesters hoping he would
resign, though oil and the dollar advanced.
Partly because of the Egypt crisis, Asian stocks were on the
course for their biggest weekly loss in nine months and European
shares were down. U.S. stock index futures also fell, indicating
a weak open on Wall Street.
However, the safe-haven Swiss franc fell against the dollar
after Swiss consumer price inflation eased slightly and gold
<XAU=> eased.
Egypt's people-power protesters, reeling with disillusion
and anger, planned massive new demonstrations on Friday but the
powerful army guaranteed the lifting of 30-year-old emerging
laws and free and fair elections in a bid to end the popular
uprising. []
Egypt five-year credit default swaps, insurance-like
contracts against debt default, rose 39 basis points to 380 bps.
"Everyone had hoped the situation in Egypt was going to go
smoothly, but the chances of this are small," Koen De Leus,
strategist at KBC Securities Bolero in Brussels, said.
"There is going to be nervousness in the market and there
are worries of possible contagion in other Middle Eastern
countries."
World stocks measured by MSCI All-Country World Index
<.MIWD00000PUS> fell 0.5 percent, down for the third day in a
row partly hit by disappointment with corporate earnings. The
index, however, is still up 2.6 percent so far this year.
The MSCI emerging market index <.MSCIEF> dropped 0.6
percent, and is down 6 percent since the beginning of the year
as some investors shift out of the booming emerging markets on
concerns over inflation and bet on improving growth in the
United States.
MSCI's index of Asia Pacific shares-ex-Japan <.MIAPJ0000PUS>
fell more than 4 percent this week, set for its worst
performance since May 2010.
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Graphic on asset returns in 2011: http://r.reuters.com/suc97r
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OIL HIGHER
Worries that rising tensions in Egypt could spread disorder
to other countries in the oil-rich region sent U.S. crude
futures <CLc1> up 0.3 percent to $87 a barrel and ICE Brent
crude <LCOc1> up 0.6 percent to $101.51 per barrel.
"Yesterday, there were the ups and downs of hopes that the
situation in Egypt was going to be resolved, but that did not
happen," said David Cohen, economist at Action Economics in
Singapore.
"So, there's still a degree of uncertainty hanging. The
politics in Cairo remains a source of pressure on oil prices."
Higher oil prices would put further pressure on the
inflationary situation in emerging economies, threatening to
hamper global growth and exaggerate the shift of funds out of
emerging markets to developed countries.
The 18th day of unrest in Egypt also helped the dollar
<.DXY>, which was up 0.5 percent against a basket of currencies.
The U.S. currency was up 0.4 percent at 0.9731 francs <CHF=>.
Yields on 10-year U.S. Treasuries <US10YT=RR> fell 4 basis
points to 3.6588 percent.
In Europe, the FTSEurofirst 300 <> index lost 0.7
percent, though it is still up 3.5 percent this year, and the
euro <EUR=> fell 0.5 percent to $1.3522.
Portugal's stocks <> dropped 0.9 percent, though the
country's 10-year Portuguese debt <PT10YT=TWEB> yield was little
changed on the day at 7.326 percent, steady relative to euro
zone benchmark German Bunds <DE10YT=TWEB>, after rising to 7.656
percent on Thursday to top the previous record set in November.
"Portugal faces a huge round of debt redemptions in April
and with current yields on Portuguese debt holding just below
post-euro creation highs it is not unreasonable to fear that
Portugal may need some sort of financial support this spring,"
said Jane Foley, senior currency strategist at Rabobank.
(Additional reporting by Joanne Frearson, Anirban Nag, William
James and Sebastian Tong in London and Seng Li Peng in
Singapore; Editing by Toby Chopra)
