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Protests in Egypt blamed for sell-off in stocks; rise in dollar, Treasurys

Escalating protests in Egypt jarred world financial markets Friday. Stocks fell while the dollar, Treasurys and gold rose as investors sought to reduce their exposure to risk.

The Egyptian government's response to widespread street protests unnerved investors.

The military was deployed in an effort to quell the protests, and the headquarters of the ruling party was on fire.

Thousands of people defied a curfew, and Internet and cell phone service has been cut off.

"The safety trade is back," said Jeffrey Frankel, president of broker Stuart Frankel & Co. "Gold is up. Oil is up. Anything related to overseas is getting hit."

Prices of Treasury bonds, considered one of the safest assets, rose sharply. The yield on the benchmark 10-year Treasury note fell to 3.33 percent from 3.38 percent late Thursday. Bond yields fall when their prices rise.

The dollar rose 0.5 percent against an index of six other currencies as investors sought safety. Gold rose 1.7 percent to settle at $1,340.70, and crude oil rose 4.3 percent to $89.34 a barrel.

The Egyptian stock market isn't open on Fridays. The market's main index fell 10.5 percent Thursday.

The MSCI World Market index, the broadest measure of the world's stock markets, slumped 1.4 percent.

"Traders are watching this flare-up in the Middle East and using it as a reason to take profits," said Doug Godine, managing director at Signal Hill, an investment bank.

Of the 30 large company stocks that make up the Dow Jones industrial average, 28 fell. The two exceptions, Procter & Gamble and DuPont, were flat.

The Dow fell 166.13 points, or1.4 percent, to close at 11,823.70. That's the worst one-day drop since Nov. 16.

The Dow lost 0.4 percent for the week after eight straight weeks of gains.

The Standard & Poor's 500 index fell 23.20, or 1.8 percent, to 1,276.34. All 10 company groups within the S&P index fell. The S&P fell 0.5 percent for the week.

The Nasdaq composite fell 68.39, or 2.5 percent, to 2,686.89. The index was not updated nearly an hour after the market opened due to technical problems. The Nasdaq lost 0.1 percent for the week.

Five stocks fell for every one that rose on the New York Stock Exchange.

Consolidated volume was high, at 5.6 billion shares.

Ford Motor Co. sank 13 percent after its earnings fell short of Wall Street's projections. Inc. fell 7 percent after reporting that higher costs cut down its profit margins.

Microsoft Corp. lost 4 percent after it said that the profitability of its Windows division was falling.

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