  We theoretically investigate ultrafast and nonlinear optical properties of
graphite thin films based on first-principles time-dependent density functional
theory. We first calculate electron dynamics in a unit cell of graphite under a
strong pulsed electric field and explore the transient optical properties of
graphite. It is shown that the optical response of graphite shows a sudden
change from conducting to insulating phase at a certain intensity range of the
applied electric field. It also appears as a saturable absorption, the
saturation in the energy transfer from the electric field to electrons. We next
investigate a light propagation in graphite thin films by solving coupled
dynamics of the electrons and the electromagnetic fields simultaneously. It is
observed that the saturable absorption manifests in the propagation with small
attenuation in the spatial region where the electric field amplitude is about
$4 \sim 7 \times 10^{-2}$ V/Angstrom.
