Global shares continued to slide on Monday, while Europe’s benchmark Brent crude was just short of US$100 a barrel on fears political unrest in Egypt could spread among regional oil-producing nations.

Protests to end the 30-year rule of President Hosni Mubarak continued over the weekend, heightening risk aversion for European investors already concerned by the effect their own region’s sovereign debt crisis and inflation could have on growth.

Moody’s Investors Service Inc. Monday downgraded Egypt’s government bond ratings to Ba2 from Ba1 and changed its outlook to negative from stable citing political risk.

“Whilst Egypt’s importance to the global economy is limited, its importance to the transportation of oil is huge,” said Jonathan Sudaria, night dealer at London Capital Group.

“Traders are concerned that with already rising inflation and falling real incomes for consumers, a further rise in energy prices could really dampen any consumer confidence and prospects for growth.”

Benchmark Brent crude had come off slightly to trade down 0.4% at US$98.93 a barrel by 0900 GMT, after hitting a 28-month high on Friday.

“The Egyptian situation looks to be the primary factor,” said David Land, chief market analyst at CMC Markets. The market is reacting to “what this could mean in terms of stability for such a vital region for energy production,” he added.

The protests in Egypt follow the collapse of the Tunisian government two weeks ago, and there are fears of similar unrest in other autocratic states including oil-rich Gulf nations.

Protest-contagion fears and risk aversion pushed European shares lower again at the open, with the FTSEurofirst 300 down 1% at 0900 GMT after falling 1% on Friday.

Elsewhere, the MSCI world equity index and Thomson Reuters global stock index were also both down around 0.5%, while emerging stocks were down 1%.

Overnight in Asia, the Nikkei share average had ended down 1.2% while the MSCI Asia Pacific ex-Japan stock index fell 1.1%.

Among commodities, spot gold steadied after hitting an Egypt-fuelled eight-week high on Friday, while copper rose 1.1% and other base metals also gained on short-covering ahead of a week-long Chinese holiday.

EURO, BUNDS STEADY

Weakness in equities helped Bund futures edge higher in early trade, with the prospect of further turmoil in the Middle East underpinning sentiment.

The Bund future was up 0.1% to 123.87 by 0849 GMT compared with 123.73 at Friday’s settlement close.

Cash 10-year Bund yields and the two-year Schatz yield were both flat.

Moody’s on Monday downgraded Egypt to Ba2 with a negative outlook on the back of the protests, citing a “far more uncertain outlook.”

In currency markets, the euro was up 0.1% against the dollar by 0853 GMT, steadying after a Friday selloff on the back of the Egypt protests.

The dollar was flat against a basket of major currencies.