Two things to note:

1. The ${var%pattern} construct is a ksh (and perhaps bash) shell thing, not bourne shell or csh.
2. The thing on the righthandside of the % is a pattern, not a regexp.

See SH(1) USER COMMANDS SH(1), do a search in the page for a percent sign. It's only about the 2nd or third entry down; you should find information about using this construct fairly readily.