Egypt index advances 3rd day after after Morsy’s victory

Egypt's main index gains for a third day after Mohamed Morsy 's presidential victory boosted hopes for a smooth transition from military to civilian rule, despite lingering uncertainty over how much power the new president would actually have.

Only days before Morsy is due to take office, the generals ruling Egypt since Hosni Mubarak's overthrow dissolved Parliament  dominated by Morsy 's Muslim Brotherhood  and took more control over the writing of a new constitution.

Several politicians decried a "coup" by the generals, but the weekend declaration of Morsy 's election victory over ex-military man Ahmed Shafiq has raised hopes that Egypt is moving towards a coherent, effective government.

Back-room talks are now under way to forge a working relationship between Morsy  and the military, which wants to keep a broad national security remit and protect wide-ranging business interests, and agree on the composition of his government.

"It's positive that the military and Morsy have sat down to try to work out a roadmap," says Teymour al-Deriny of Naeem Brokerage. "They've clearly agreed on something. There's going to be a power struggle for decades, but there has always has been a power struggle."

The benchmark index climbs 0.4 percent to 4,628 points. Morsy 's election win had pushed the index up 7.6 percent on Monday, the fourth-biggest gain since it was created in 1998, and a further 2.9 percent on Tuesday.

Real estate company Palm Hills was among the biggest gainers, rising 2.8 percent on Wednesday, but other property developers decline, with Egyptian Resorts dipping 1 percent and Amer Group 1.6 percent.

"Real estate is seen as a hedge against currency and inflation risk," says Deriny. The Egyptian pound reached its weakest since early 2005 this week.

Economists say the central bank has used up more than half of Egypt's foreign reserves to support the currency through economic turmoil since Hosni Mubarak's overthrow last year. A sharp drop in the pound would raise prices of imported goods.

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