"In our view, the ongoing political instability and unrest will hamper Egypt's economic growth and adversely affect its public finances," the ratings agency said in a statement.

S&P's thus lowered its foreign currency long-term rating on Egypt from 'BB+'to 'BB', and the local currency long-term and short-term ratings to 'BB+/B'.

The agency also gave notice that its ratings for Egypt may be lowered again in the next three months "if we see further significant instability in the political environment."

On Monday fellow ratings agency Moody's announced it had downgraded Egypt's debt rating by one notch to "Ba2", and changed the troubled country's outlook to negative from stable.

On Friday the Fitch ratings agency revised its outlook for Egypt to negative.

"We expect the current political instability and violent conflict to affect Egypt's economic growth in 2011 and beyond, not least through the adverse impact on the important tourism sector," the ratings agency said.

S&P's added that it expected "the violent demonstrations of the past week will persist," despite Egyptian President Hosni Mubarak's decision to appoint a vice-president for the first time and dismiss the government.

Several hundred thousand Egyptians massed Tuesday for the biggest outpouring of anger yet in their drive to oust Mubarak, on day eight of a revolt in which an estimated 300 have died.