Egypt stocks surge after army ultimatum on political crisis
CAIRO, July 2 (Reuters) - Egyptian shares jumped to a three-week high in early trade on Tuesday, a day after the armed forces gave Islamist President Mohamed Mursi a virtual ultimatum to share power.
Local investors believe army intervention in the political crisis could help put an end to 30 months of instability that has frightened away investors and tourists and drained the country's finances.
Nationwide protests against Mursi prompted the army to tell feuding politicians they had 48 hours to compromise or it would impose its own road map for the country.
The bourse's benchmark index jumped 4.9 percent in early trade to its highest point since June 9 after a bank holiday on Monday to mark the start of a new fiscal year.
Share prices fell 12 percent in June on fears that a mass protest called for June 30 might deteriorate into violence, further aggravating a deteriorating economy.
"It's a relief rally. The market has been sold off very heavily in the last few weeks," said Simon Kitchen, strategist for EFG Hermes.
Mursi rebuffed the army ultimatum on Tuesday, saying he had not been consulted and would pursue his own plans for national reconciliation.
But he looked increasingly isolated, with the liberal opposition refusing to talk to him, millions of Egyptians in the street protesting against him and at least five of his ministers resigning from his government.
"The political environment is still very fluid, so its not certain how long this can last," Kitchen said.
Shares soared in companies considered close the government of Hosni Mubarak, who was ousted from the presidency in a 2011 popular uprising.
Private equity firm Citadel Capital jumped by the 10 percent maximum allowed under stock exchange rules. Among property developers Palm Hills rose 9.3 percent and Talaat Moustafa 4.7 percent.
(Reporting by Patrick Werr)