(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
injured.
"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)