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Wed 12 Dec 2007 02:35 AM

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Lebanon shares drop on presidential crisis

BLOM stock index falls 4.2% as investors fret over difficulties facing rival politicians in electing president.

Lebanon's BLOM stock index fell 4.2% on Tuesday as investors fretted over difficulties facing rival Lebanese politicians in electing a president in a vote which has been delayed eight times.

The index closed at 1,519.08 points compared to Monday's 1,585.60 points. The A share of real estate market heavyweight firm Solidere fell 6.33% to close at $23.50. Its B share fell 6.44% to close at the same price.

More than 600,000 Solidere shares changed hands in turnover of about $14 million, the biggest contributor to the market's daily traded value.

Parliament Speaker Nabih Berri on Monday postponed the election for the eighth time to December 17 to give feuding leaders more time to reach a deal expected to make the army chief president.

"When the army chief was announced as a presidential candidate, Solidere rose, but today because the deal looks obstructed, the market has reacted by falling," Louis Karam, senior investment adviser with Arab Finance Corporation, said.

The market has reacted sharply in recent weeks to the ups and downs in the presidential crisis. Analysts say Solidere is particularly affected because of expectations that the real-estate sector would flourish after the political standoff is resolved.