CAIRO (Reuters) - Islamists and their rivals clashed in an outbreak of stone-throwing near the presidential palace in Cairo on Thursday, even though Egyptian army tanks had moved in to try to halt violence that has killed seven people.
The military played a crucial role in ending Hosni Mubarak's 30-year rule by taking over from him to manage a transitional period, but it has stayed out of the latest crisis.
The commander of the Republican Guard, whose units were involved in the deployment around the palace, said it was meant to separate the opposing sides, not to repress them.
"The armed forces, and at the forefront of them the Republican Guard, will not be used as a tool to oppress the demonstrators," General Mohamed Zaki told the state news agency.
Armored troop carriers also deployed and troops unfurled barbed wire to protect the palace and help police pacify what had become a chaotic battleground for thousands of supporters of Mohamed Mursi and opponents of the Islamist president.
Mursi himself, silent in the turbulence of the last few days, will address the nation later in the day, state television quoted a presidential adviser as saying.
After opposing crowds fought long into the night, the streets around the palace were much calmer in the morning, apart from the brief period of rock-throwing between the hundreds of Islamists and dozens of opposition partisans still at the scene.
Army officers on the spot urged the combatants to back off and stop bloodshed that is further dividing Egypt and imperiling its quest for political stability and economic recovery nearly two years after mass protests overthrew Mubarak.
Officials said 350 people had been wounded, in addition to the seven deaths, underlining the scale of the conflict in the Egyptian capital and other cities, following bitter rows over Mursi's assumption of wide powers on November 22 to help him push through a mostly Islamist-drafted constitution.
MORE PROTESTS PLANNED
The Supreme Guide of Egypt's Muslim Brotherhood, to which Mursi belonged before he was narrowly elected president in June, appealed for unity. Divisions among Egyptians "only serve the nation's enemies", Mohamed Badie said in a statement.
With at least seven tanks at the palace corners, backed by about 10 armored troop carriers and 20 police trucks, the two sides mostly shouted slogans at each other from a distance.
But opposition activist Hamdi Ghassan told Reuters at the scene that protesters would arrive from other parts of Cairo later in the day, accusing Mursi's supporters of bussing in people from the countryside to boost their presence.
Mursi's opponents accuse him of seeking to create a new "dictatorship" with his November 22 decree and were further angered when an Islamist-dominated assembly hastily approved a draft constitution due to go to a referendum on December 15.
The president has defended his decree as necessary to prevent courts still full of judges appointed by Mubarak from derailing a constitution vital for Egypt's political transition.
Around the palace, traffic was moving through streets strewn with rocks thrown during violence in which petrol bombs and guns were also used. Hundreds of Mursi supporters were still in the area, many wrapped in blankets and some reading the Koran.
"We came here to support President Mursi and his decisions. He is the elected president of Egypt," said demonstrator Emad Abou Salem, 40. "He has legitimacy and nobody else does."
Mursi's opponents say the Muslim Brotherhood, the group that propelled the president to power in a June election, is behind the violence. The Brotherhood says the opposition is to blame and that six of the dead were Mursi supporters.
WESTERN CONCERN
The United States, worried about the stability of an Arab state which has a peace deal with Israel and which receives $1.3 billion in U.S. military aid, urged dialogue. Britain also called for restraint and an "inclusive" political process.
Vice President Mahmoud Mekky proposed "personal ideas" for a negotiated way out on Wednesday, saying amendments to disputed articles in the constitution could be agreed with the opposition. A written agreement could then go to parliament, to be elected after this month's referendum on the constitution.
"There must be consensus," he told a news conference in the presidential palace as fighting raged outside on Wednesday. But the opposition stuck by its demand for Mursi to cancel the November 22 decree and postpone the referendum before any dialogue.
Protests spread to other cities, and offices of the Muslim Brotherhood's political party in Ismailia and Suez were torched.
But Mursi has shown no sign of buckling under pressure from protesters, confident that the Islamists, who have dominated both elections since Mubarak was overthrown, can win the referendum and the parliamentary election to follow.
As well as relying on his Brotherhood power base, Mursi may also draw on a popular yearning for stability and economic revival after almost two years of political turmoil.
Opposition coordinator Mohamed ElBaradei said on Wednesday the street action and the polarization of society were pushing Egypt into violence and "could draw us to something worse".
The Egyptian pound plunged 4 percent on Thursday to its lowest level in eight years, after previously firming on hopes that a $4.8 billion IMF loan would stabilize the economy. The Egyptian stock market fell 4.4 percent after it opened.
(Additional reporting by Reuters TV; Tamim Elyan, Yasmine Saleh and Tom Perry, Writing by Edmund Blair and Tom Perry; Editing by Alistair Lyon and Giles Elgood)
