World leaders on Friday welcomed Egyptian President Hosni Mubarak's decision to step down after 18 days of nationwide protests, saying they hoped to see a swift transition of power in the country.

UN Secretary General Ban Ki-moon commended in particular the youth of Egypt for exercising their "legitimate" right to protest.

"The voice of the Egyptian people has been heard," Ban said, renewing his call for a "transparent, peaceful and orderly" transition in Egypt - the extent and pace of which, he said, was up to the Egyptian people.

In a televised speech, US President Barack Obama praised the grass-roots protest movement in Egypt, comparing the changes there to the fall of the Berlin Wall.

He stressed that it was "the moral force of non-violence, not terrorism ... that bent the arc of history toward justice once more."

"I am confident that the ingenuity and entrepreneurial spirit that the young people of Egypt have shown in recent days can be harnessed to create opportunity ... that will allow the extraordinary potential of the generation to take flight," he said, pledging that the US was ready to help Egypt in building a democracy.

Praise from Europe

Meanwhile, European Union chief diplomat Catherine Ashton said Mubarak had "listened to the voices of the people."

Ashton praised Mubarak's decision, saying he had "opened the way to faster and deeper reforms" in Egypt.

"It is important now that the dialogue is accelerated leading to a broad-based government which will respect the aspirations of, and deliver stability for, the Egyptian people," Ashton added.

"The future of Egypt rightly remains in the hands of the Egyptian people … The EU stands ready to help in any way it can," the statement continued.

German Chancellor Angela Merkel also welcomed Mubarak's decision as an "historic change."

"I call on those who now bear the responsibility and will bear the responsibility to make the developments in Egypt irreversible," she told reporters in Berlin, where hundreds of Egyptians gathered to celebrate in front of the city's Brandenburg Gate.

"I rejoice with the people in Egypt," the German chancellor said.

Germany's second-in-charge, Foreign Minister Guido Westerwelle, said ahead of his Saturday visit with Tunisia's interim authorities that Germany was "glad that the way has been cleared for a new political beginning."

French President Nicolas Sarkozy meanwhile called Mubarak's step down a "courageous and necessary" move.

In a statement, Sarkozy urged Egypt to hold free elections, saying, "France ardently hopes the new Egyptian authorities will take steps that lead to the establishment of democratic institutions through free and transparent elections."

Poland's foreign ministry reacted to the news Friday, saying in a statement that a "truly democratic Egypt, open to cooperating with the world, living in peace and harmony with all its neighbors has a chance to contribute to strengthening the stabilisation of the region, including reaching a hoped-for breakthrough in the Middle East peace process."

The Swiss government announced meanwhile it would freeze any of Mubarak's assets if found to be stashed in Switzerland. Last month, Switzerland slapped a similar freeze on assets of Tunisia's ex-President Zine El Abidine Ben Ali after his ouster.

Reactions in the Middle East

In the Middle East, Israel expressed concern that Mubarak's resignation could change its current peaceful ties with Egypt.

"It's too early to foresee how (the resignation) will affect things," a senior Israeli official said, adding, "We hope that the change to democracy in Egypt will happen without violence and that the peace accord will remain."

Meanwhile Iran's government proclaimed Mubarak's ouster a "great victory," as the country celebrated the 32nd anniversary of its Islamic Revolution.

"The conquest by the will of the great Egyptian nation over the resistance and persistence of officials who were dependent on the world powers is a great victory," foreign ministry spokesman Ramin Mehmanparast told Iran's Arabic-language Al-Alam television.

Witnesses say residents poured into the streets in celebration in Egypt, Tunisia and Yemen, where thousands of government opposition protesters cheered at the news in the capital Sanaa.

"Yesterday Tunisia, today Egypt, and tomorrow Yemenis will break their chains," some demonstrators chanted.

Stocks go up, oil prices down

Mubarak's deputy, Egyptian Vice President Omar Suleiman, announced Friday that Mubarak would step down, leaving power to the Higher Military Council, led by Egypt's Defense Minister Mohamed Hussein Tantawi.

European stock markets swiftly bounced Friday upon news of Mubarak's resignation, with Germany's DAX closing at a three-year high. Meanwhile, world oil prices slid worldwide due to buyers' receding concerns that crude supply through the Suez Canal could be blocked.

Author: David Levitz (AFP, AP, Reuters)

Editor: Susan Houlton