(Bloomberg News) Egypt's default risk fell and shares rallied as Hosni Mubarak stepped down as the country's president and handed power to the military, bowing to the demands of protesters.

The cost of insuring Egyptian government debt fell 24 basis points to 313, according to CMA prices for credit-default swaps, tumbling from as high as 379 basis points earlier today. The Market Vectors Egypt Index ETF, an exchange-traded fund that holds Egyptian shares, gained 7.6% in New York, the most since Jan. 31. Egypt's 5.75% dollar bond due 2020 rallied, cutting the yield by 9 basis points at 6.41%, data compiled by Bloomberg as of 4:29 p.m. in London show.

The resignation removes "some degree of uncertainty in terms of the stalemate," said Elisabeth Gruie, an emerging-market strategist with BNP Paribas SA in London. "The crucial question is what's next and how long it will take to form a stable government and whether it will be recognized and be endorsed by the people of Egypt."

Mubarak's resignation came after Egyptians streamed out of Friday prayers vowing to topple Mubarak, 82, after he yesterday defied calls for him to leave for the second time this month. Military helicopters buzzed the presidential palace at dusk and Arabiya television earlier reported that Mubarak had left Cairo for the Sinai resort of Sharm El-Sheikh.

"Mubarak has decided to relinquish the office of the presidency," said Vice President Omar Suleiman in a statement on state television today. "He has instructed the Supreme Council of the armed forces to take over the affairs of the country."