Unknown attackers fire at Cairo protesters, nine hurt

CAIRO (Reuters) - Nine people were hurt when unknown attackers fired at protesters camping at Tahrir Square in central Cairo on Tuesday, according to witnesses and Egyptian media, as opponents and supporters of President Mohamed Mursi's plans to vote on a new constitution geared up for a day of street demonstrations.

Police cars surrounded the square, the first time they had appeared in the area since November 23, shortly after a decree by the Islamist president giving himself sweeping temporary powers touched off widespread protests.

The attackers also threw petrol bombs which started a small fire, witnesses said. Many of the protesters, awakened by the noise, chanted: "The people want the downfall of the regime." Recorded recitations of the Koran were played over speakers in the square.

Leftists, liberals and other opposition groups have called for marches to the presidential palace in the afternoon to protest against the hastily arranged referendum on a new constitution planned for Saturday, which they say is polarizing the country.

Islamists, who dominated the body that drew up the constitution, have urged their followers to turn out "in millions" the same day in a show of support for the president and for a referendum they feel sure of winning and that critics say could put Egypt in a religious straitjacket.

Seven people were killed and hundreds wounded last week in clashes between the Islamist Muslim Brotherhood and opponents besieging Mursi's graffiti-daubed presidential palace.

The elite Republican Guard has yet to use force to keep protesters away from the palace, now ringed with tanks, barbed wire and concrete barricades, but a decree issued by Mursi late on Sunday gives the armed forces the power to arrest civilians during the referendum and until the announcement of the results.

OPPOSITION SAYS MURSI DESTROYING CONSENSUS

Leftist politician Hamdeen Sabahy, one of the most prominent members of the National Salvation Front opposition coalition, said Mursi was driving a wedge between Egyptians and destroying prospects for consensus.

As well as pushing the early referendum, Mursi has angered opponents by taking sweeping temporary powers he said were necessary to secure the country's transition to stability after a popular uprising overthrew autocratic former president Hosni Mubarak 22 months ago.

"The road Mohamed Mursi is taking now does not create the possibility for national consensus," said Sabahy.

If the constitution was passed, he said: "Egypt will continue in this really charged state. It is certain that this constitution is driving us to more political polarization."

The National Salvation Front also includes Nobel Peace Prize laureate Mohamed ElBaradei and former Arab League chief Amr Moussa.

The opposition says the draft constitution fails to embrace the diversity of 83 million Egyptians, a tenth of whom are Christians, and invites Muslim clerics to influence lawmaking.

But debate over the details has largely given way to noisy street protests and megaphone politics, keeping Egypt off balance and ill equipped to deal with a looming economic crisis.

Lamia Kamel, a spokeswoman for Moussa, said the opposition factions were still discussing whether to boycott the referendum or call for a "no" vote.

"Both paths are unwelcome because they really don't want the referendum at all," she said, but predicted a clearer opposition line if the plebiscite went ahead as planned.

Mahmoud Ghozlan, the Muslim Brotherhood's spokesman, said the opposition could stage protests, but should keep the peace.

"They are free to boycott, participate or say no; they can do what they want. The important thing is that it remains in a peaceful context to preserve the country's safety and security."

The army stepped into the conflict on Saturday, telling all sides to resolve their disputes via dialogue and warning that it would not allow Egypt to enter a "dark tunnel".

The continuing disruption is also casting doubts on the government's ability to push through tough economic reforms that form part of a proposed $4.8 billion IMF loan agreement.

(Writing by Edmund Blair; Editing by Will Waterman, Mohammad Zargham and Jim Loney)

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Mandela has lung infection, says government

 

JOHANNESBURG: Ailing Nelson Mandela has a lung infection but is responding to treatment, South Africa's government said Tuesday, as the revered anti-apartheid icon spent his fourth day in hospital.

"Doctors have concluded the tests, and these have revealed a recurrence of a previous lung infection, for which Madiba is receiving appropriate treatment and he is responding to the treatment," said a statement from President Jacob Zuma's office.

- AFP

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Time has come to dismiss Parliament: Hazare

NEW DELHI: The time has come to dismiss Parliament, anti-corruption crusader Anna Hazare said on Tuesday while announcing a nationwide tour against the United Progressive Alliance ( UPA) government and graft.

"I will start nationwide tour against government and corruption from Jan 30 from Patna district of Bihar," Hazare told reporters here.

"The time has come to dismiss Parliament. People sitting in Parliament are allowing foreign countries to come to the Indian market," he added.

Hazare was discharged on Monday from the Medanta Medicity Hospital in Gurgaon where he had been admitted after he complained of acidity and stress.

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New tests could hamper food outbreak detection

WASHINGTON (AP) — It's about to get faster and easier to diagnose food poisoning, but that progress for individual patients comes with a downside: It could hurt the nation's ability to spot and solve dangerous outbreaks.

Next-generation tests that promise to shave a few days off the time needed to tell whether E. coli, salmonella or other foodborne bacteria caused a patient's illness could reach medical laboratories as early as next year. That could allow doctors to treat sometimes deadly diseases much more quickly — an exciting development.

The problem: These new tests can't detect crucial differences between different subtypes of bacteria, as current tests can. And that fingerprint is what states and the federal government use to match sick people to a contaminated food. The older tests might be replaced by the new, more efficient ones.

"It's like a forensics lab. If somebody says a shot was fired, without the bullet you don't know where it came from," explained E. coli expert Dr. Phillip Tarr of Washington University School of Medicine in St. Louis.

The federal Centers for Disease Control and Prevention warns that losing the ability to literally take a germ's fingerprint could hamper efforts to keep food safe, and the agency is searching for solutions. According to CDC estimates, 1 in 6 Americans gets sick from foodborne illnesses each year, and 3,000 die.

"These improved tests for diagnosing patients could have the unintended consequence of reducing our ability to detect and investigate outbreaks, ultimately causing more people to become sick," said Dr. John Besser of the CDC.

That means outbreaks like the salmonella illnesses linked this fall to a variety of Trader Joe's peanut butter might not be identified that quickly — or at all.

It all comes down to what's called a bacterial culture — whether labs grow a sample of a patient's bacteria in an old-fashioned petri dish, or skip that step because the new tests don't require it.

Here's the way it works now: Someone with serious diarrhea visits the doctor, who gets a stool sample and sends it to a private testing laboratory. The lab cultures the sample, growing larger batches of any lurking bacteria to identify what's there. If disease-causing germs such as E. coli O157 or salmonella are found, they may be sent on to a public health laboratory for more sophisticated analysis to uncover their unique DNA patterns — their fingerprints.

Those fingerprints are posted to a national database, called PulseNet, that the CDC and state health officials use to look for food poisoning trends.

There are lots of garden-variety cases of salmonella every year, from runny eggs to a picnic lunch that sat out too long. But if a few people in, say, Baltimore have salmonella with the same molecular signature as some sick people in Cleveland, it's time to investigate, because scientists might be able narrow the outbreak to a particular food or company.

But culture-based testing takes time — as long as two to four days after the sample reaches the lab, which makes for a long wait if you're a sick patient.

What's in the pipeline? Tests that could detect many kinds of germs simultaneously instead of hunting one at a time — and within hours of reaching the lab — without first having to grow a culture. Those tests are expected to be approved as early as next year.

This isn't just a science debate, said Shari Shea, food safety director at the Association of Public Health Laboratories.

If you were the patient, "you'd want to know how you got sick," she said.

PulseNet has greatly improved the ability of regulators and the food industry to solve those mysteries since it was launched in the mid-1990s, helping to spot major outbreaks in ground beef, spinach, eggs and cantaloupe in recent years. Just this fall, PulseNet matched 42 different salmonella illnesses in 20 different states that were eventually traced to a variety of Trader Joe's peanut butter.

Food and Drug Administration officials who visited the plant where the peanut butter was made found salmonella contamination all over the facility, with several of the plant samples matching the fingerprint of the salmonella that made people sick. A New Mexico-based company, Sunland Inc., recalled hundreds of products that were shipped to large retailers all over the country, including Target, Safeway and other large grocery chains.

The source of those illnesses probably would have remained a mystery without the national database, since there weren't very many illnesses in any individual state.

To ensure that kind of crucial detective work isn't lost, the CDC is asking the medical community to send samples to labs to be cultured even when they perform a new, non-culture test.

But it's not clear who would pay for that extra step. Private labs only can perform the tests that a doctor orders, noted Dr. Jay M. Lieberman of Quest Diagnostics, one of the country's largest testing labs.

A few first-generation non-culture tests are already available. When private labs in Wisconsin use them, they frequently ship leftover samples to the state lab, which grows the bacteria itself. But as more private labs switch over after the next-generation rapid tests arrive, the Wisconsin State Laboratory of Hygiene will be hard-pressed to keep up with that extra work before it can do its main job — fingerprinting the bugs, said deputy director Dr. Dave Warshauer.

Stay tuned: Research is beginning to look for solutions that one day might allow rapid and in-depth looks at food poisoning causes in the same test.

"As molecular techniques evolve, you may be able to get the information you want from non-culture techniques," Lieberman said.

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Follow Mary Clare Jalonick on Twitter at http://twitter.com/mcjalonick

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SEAL Killed in Rescue Mission Identified

The Pentagon has identified Petty Officer 1st Class Nicolas Checque as the Navy SEAL who died of injuries sustained in the successful rescue of an American doctor from the Taliban over the weekend.

Checque, who hailed from Monroeville, Pa., died of "combat related injuries," according to a Pentagon release. Though the release only said Checque was assigned to "an East Coast-based Naval Special Warfare unit," ABC News previously reported the fallen servicemember was a part of the Navy's elite SEAL Team 6, the same unit that killed Osama bin Laden.

Checque, 28, sustained his mortal injuries while on a nighttime mission Saturday to free Dr. Dilip Joseph, an American doctor who worked for an non-governmental organization based in Kabul. Joseph was kidnapped by the Taliban earlier this month and American officials believed he was in imminent danger.

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Joseph's family released a statement thanking the U.S. government and military for the operation and offering their condolences to Checque's family.

"We could not be more grateful for that soldier's heroism and for the bravery of all involved in the mission to bring Dilip home," the statement said.

Before Checque was identified publicly, Defense Secretary Leon Panetta said Sunday he was "deeply saddened" to learn one of the servicemen had died.

"The special operators who conducted this raid knew they were putting their lives on the line to free a fellow American from the enemy's grip. They put the safety of another American ahead of their own, as so many of our brave warriors do every day and every night. In this fallen hero, and all of our special operators, Americans see the highest ideals of citizenship, sacrifice and service upheld. The torch of freedom burns brighter because of them," Panetta said.

President Obama also praised the Special Operations force for their bravery.

"Yesterday, our special operators in Afghanistan rescued an American citizen in a mission that was characteristic of the extraordinary courage, skill and patriotism that our troops show every day," he said Sunday.

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Analysis: Franco-German chill reshuffles cards in Europe

PARIS (Reuters) - A chill has settled over the Rhine seven months after the election of Socialist French President Francois Hollande, reshuffling the cards in Europe's perpetual power game.

The cooling of traditionally close Franco-German relations was partly an intentional step by Hollande to demonstrate that he is not in conservative Chancellor Angela Merkel's pocket but wants to change the policy direction of the European Union.

It also reflects a fraught process of rebalancing power to accommodate Germany's greater political heft and economic clout.

Despite vows of ever closer cooperation that are sure to mark the 50th anniversary next month of the treaty that sealed post-war Franco-German reconciliation, tension is likely to simmer at least until next September's German general election.

Hollande was keen to distance himself from his conservative predecessor Nicolas Sarkozy's exclusive alliance with the German leader, which became known as "Merkozy" because of the dominant role they played in steering the euro zone debt crisis.

Hollande and Merkel have differed publicly over the right mix between austerity and growth policies, the future of the euro area, a European banking union, and industrial policy.

A series of disputes over common euro zone bonds, the EU budget and the aerospace industry have exposed mutual distrust between German and French officials and business leaders, despite entrenched habits of cooperation.

"It's not an easy dialogue," said Bruno Le Roux, parliamentary floor leader of Hollande's Socialist Party. "It was on the wrong track for the last couple of years and the fact that France was in an electoral cycle for a year and now Germany is in an electoral cycle for a year doesn't help."

Le Roux, who is close to Hollande, said the president had set out to broaden the debate about changing the euro zone's course by including countries such as Italy and Spain that are closer to his approach of "integration with solidarity."

That had led Merkel to build bridges with non-euro Britain on issues such as the EU budget, at France's expense.

Whereas France and Germany cut a deal to preserve the level of agricultural subsidies - of which the French are the chief beneficiaries - in the last long-term EU budget, Berlin cold-shouldered approaches by Paris for a similar pact this time.

In last month's aborted negotiations on the 2014-20 budget, Merkel endorsed lower farm spending despite French pleas and backed British pressure for deeper cuts in total EU expenditure.

The chancellor has expressed public concern about the loss of competitiveness of Europe's second largest economy. Her Finance Minister Wolfgang Schaeuble last month asked a panel of economic advisers to consider reform proposals for France.

In private, senior German officials worry about Hollande's ability to secure support in his Socialist party for the bold shake-up of labor markets, welfare financing and public spending that experts say France needs after the anti-business rhetoric of his election campaign.

Berlin has watched aghast the national drama in France over efforts to save 630 jobs at steelmaker ArcelorMittal, featuring threats to nationalize an ageing steelworks shuttered due to chronic overcapacity in the sector.

In German eyes, the furor over Mittal's Florange plant epitomizes a lack of economic realism and a statist intervention reflex that run counter to Germany's business culture.

Berlin policymakers recognize that Hollande is making a gradual turn towards economic reform, but they have still to be convinced of his determination to stay the course if left-wing and trade union resistance mounts.

Franco-German tensions over power-sharing, industrial policy and the role of the state came to a head in the struggle over European aerospace leader EADS.

Berlin prevented a merger between the Airbus parent and Britain's BAE Systems last month, fearing Germany would be overruled by Franco-British defense interests. The Germans then demanded an equal shareholding with Paris' in EADS.

The result was a shake-up of the European planemaker in which the Berlin government paid more than $2 billion to buy a stake matching France's, only to see the role of state shareholders greatly reduced by new governance arrangements.

The Germans were "obsessed with parity because they are convinced the French want to take over the company, just as the French are convinced the Germans want to take it over," said a person involved in the negotiations, who spoke on condition of anonymity.

The age when Germany was willing to sign the cheques but let France take the lead in Europe - whether to atone for World War Two or to ease the way for German unification - is over.

EADS is a paradigm for wider difficulties in relations, both because of the mutual suspicion and because of Berlin's determination to assert its increased power in a venture in which the French previously had the upper hand.

Hollande argues that each step towards closer integration in the euro zone should be preceded by an increase in "solidarity" - code for Germany doing more to support weaker southern states.

In contrast, Merkel insists there must be greater central control of national budgetary and economic policies to ensure they respect EU rules before any sharing of liabilities.

The Frenchman advocates common euro zone bonds to help pay off those countries' accumulated debts. He also wants joint deposit insurance in which German depositors and taxpayers would underwrite shaky banks in other euro zone states.

Both ideas are anathema in Germany, at least this side of the election and probably for much longer.

Irked by Hollande's perceived attempts to isolate her, Merkel has reached out to other partners to strengthen her hand in European negotiations.

In an essay entitled "After Merkozy, how France and Germany can make Europe work" (*), Ulrike Guerot and Thomas Klau of the European Council on Foreign Relations recount how Berlin lines up support from the Dutch and Finns, fellow north European AAA-rated nations, before dealing with the French.

"We call the French only once we have established a common position among our group of like-minded countries," they quoted a German official involved in financial negotiations as saying.

"And we know that once we start speaking with the French, then the trouble starts."

* After Merkokzy, how France and Germany can make Europe work, policy brief, ECFR.

http://ecfr.eu/page/-/ECFR56_FRANCE_GERMANY_BRIEF_AW.pdf

(Additional reporting by Tim Hepher; editing by James Jukwey)

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Greece extends debt buyback to Tuesday

ATHENS: Greece announced it had extended until Tuesday a debt buyback offer, the success of which is key for it to receive bailout funding from the EU and IMF without which it could soon go bankrupt.

"We have decided to extend the invitation to offer designated securities for exchange to 11 December 2012," the head of Greece's PDMA debt management agency, Stelios Papadopoulos, said in a statement on Monday.

Private holders of Greek sovereign bonds originally had to submit by Friday their offers to participate in the buyback, which offered them 32.2 to 40.1 percent of the face value of the securities.

The PDMA statement said they now had until 1200 GMT on Tuesday to submit bids to participate in the buyback, which aims to cut Greece's debt by around 20 billion euros (US$26 billion) and is vital to qualify for more financial aid from the European Union and International Monetary Fund.

The head of the PDMA warned that any future offers to buy back debt may not be as advantageous to investors.

"Future measures may not involve an opportunity to exit investments (Greek sovereign bonds) at the levels offered for this buyback," Papadopoulos said.

The IMF and the eurozone have agreed to release 43.7 billion euros in rescue loans in four instalments to enable Greece to avoid bankruptcy provided Athens carries out the bond buyback.

- AFP/ir

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Smokers celebrate as Wash. legalizes marijuana

SEATTLE (AP) — The crowds of happy people lighting joints under Seattle's Space Needle early Thursday morning with nary a police officer in sight bespoke the new reality: Marijuana is legal under Washington state law.

Hundreds gathered at Seattle Center for a New Year's Eve-style countdown to 12 a.m., when the legalization measure passed by voters last month took effect. When the clock struck, they cheered and sparked up in unison.

A few dozen people gathered on a sidewalk outside the north Seattle headquarters of the annual Hempfest celebration and did the same, offering joints to reporters and blowing smoke into television news cameras.

"I feel like a kid in a candy store!" shouted Hempfest volunteer Darby Hageman. "It's all becoming real now!"

Washington and Colorado became the first states to vote to decriminalize and regulate the possession of an ounce or less of marijuana by adults over 21. Both measures call for setting up state licensing schemes for pot growers, processors and retail stores. Colorado's law is set to take effect by Jan. 5.

Technically, Washington's new marijuana law still forbids smoking pot in public, which remains punishable by a fine, like drinking in public. But pot fans wanted a party, and Seattle police weren't about to write them any tickets.

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

The mood was festive in Seattle as dozens of gay and lesbian couples got in line to pick up marriage licenses at the King County auditor's office early Thursday.

King County and Thurston County announced they would open their auditors' offices shortly after midnight Wednesday to accommodate those who wanted to be among the first to get their licenses.

Kelly Middleton and her partner Amanda Dollente got in line at 4 p.m. Wednesday.

Hours later, as the line grew, volunteers distributed roses and a group of men and women serenaded the waiting line to the tune of "Chapel of Love."

Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

In dealing with marijuana, the Seattle Police Department told its 1,300 officers on Wednesday, just before legalization took hold, that until further notice they shall not issue citations for public marijuana use.

Officers will be advising people not to smoke in public, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to."

He offered a catchy new directive referring to the film "The Big Lebowski," popular with many marijuana fans: "The Dude abides, and says 'take it inside!'"

"This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow."

Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

"The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress."

The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Alison Holcomb is the drug policy director of the American Civil Liberties Union of Washington and served as the campaign manager for New Approach Washington, which led the legalization drive. She said the voters clearly showed they're done with marijuana prohibition.

"New Approach Washington sponsors and the ACLU look forward to working with state and federal officials and to ensure the law is fully and fairly implemented," she said.

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Johnson can be reached at https://twitter.com/GeneAPseattle

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Fiscal Cliff Talks: Boehner, Obama Meet Face-to-Face

For the first time in more than three weeks, President Obama and House Speaker John Boehner met face-to-face today at the White House to talk about avoiding the fiscal cliff.

White House Principal Deputy Press Secretary Josh Earnest would offer no details saying only, "The lines of communication remain open."

Erskine Bowles, the co-creator of a debt reducing plan, who was pessimistic a couple weeks ago, said he likes what he's hearing.

"Any time you have two guys in there tangoing, you have a chance to get it done," Bowles said on CBS's "Face the Nation."

The White House afternoon talks, conducted without cameras or any announcement until they were over, came as some Republicans were showing more flexibility about approving higher tax rates for the wealthy, one of the president's demands to keep the country from the so-called fiscal cliff -- a mixture of across-the-board tax increases and spending cuts that many economists say would send the country back into recession.

Carolyn Kaster/AP Photo; Pablo Martinez Monsivais/AP Photo

Fiscal Cliff Battle: President Obama vs. Speaker John Boehner Watch Video

"Let's face it. He does have the upper hand on taxes. You have to pass something to keep it from happening," Sen. Bob Corker of Tennessee said on "FOX News Sunday."

This comes after the White House moderated one of its demands about tax rate increases for the wealthy.

The administration was demanding the rate return to its former level of 39.6 percent on income above $250,000. The so-called Bush tax cut set that rate at 35 percent. But Friday, Vice President Joe Biden signaled that rate could be negotiable, somewhere between the two.

"So will I accept a tax increase as a part of a deal to actually solve our problems? Yes," said Oklahoma Republican Tom Coburn on ABC's "This Week."

The problems the senator was referring to are the country's entitlement programs. And there was some progress on that front, too.

A leading Democrat said means testing for Medicare recipients could be a way to cut costs to the government health insurance program. Those who make more money would be required to pay more for Medicare.

"I do believe there should be means testing, and those of us with higher income and retirement should pay more. That could be part of the solution," Sen. Dick Durbin of Illinois said on NBC's "Meet the Press."

But Durbin said he would not favor raising the eligibility age from 65 years old to 67 years old, as many Republicans have suggested.

The White House and the speaker's office released the exact same statement about the negotiating session. Some will see that as a sign of progress, that neither side is talking about what was said behind closed doors.

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Egypt president scraps decree that sparked protests

CAIRO (Reuters) - Egyptian President Mohamed Mursi has cancelled a decree that gave him sweeping powers and sparked violent unrest but did not delay this month's referendum on a new constitution that was a major demand of his opponents.

Islamist supporters of Mursi have insisted the referendum should go ahead on time on December 15, saying it is needed to complete a democratic transition still incomplete after autocrat Hosni Mubarak's overthrow 22 months ago.

Ahmed Said, a leading member of the main opposition National Salvation Front said the decision to press ahead with the referendum was "shocking" and would deepen a political crisis.

"It is making things a lot worse," Said, head of the liberal Free Egyptians Party, told Reuters. "I cannot imagine that after all this they want to pass a constitution that does not represent all Egyptians." He said the Front would meet later on Sunday to give a formal response.

The announcement that Mursi had scrapped his November 22 decree followed talks on Saturday that ran into the night at his presidential palace. Billed as a "national dialogue", the meeting was boycotted by his main rivals and had little credibility among protesters in the most populous Arab nation.

The April 6 movement, which helped galvanize street protests against Mubarak, said in a statement about the outcome of Saturday's talks: "What happened is manipulation and a continuation of deception in the name of law and legitimacy."

The constitution was fast-tracked through an assembly led by Mursi's Muslim Brotherhood and other Islamists. Liberals and others walked out, saying their voices were not being heard.

"A constitution without consensus cannot go to a referendum," said Hermes Fawzi, 28, a protester camped with dozens of others outside the presidential palace. "It's not logical that just one part of society makes the constitution."

Nearby were tanks and military vehicles of the Republican Guards positioned there to protect the palace after clashes in the past week between Islamists and their rivals killed seven people and injured about 350.

The military, which led Egypt through a turbulent interim period after Mubarak fell, stepped into the crisis on Saturday to tell feuding factions that dialogue was essential to avoid "catastrophe." But a military source said this was not a prelude to the army retaking control of Egypt or the streets.

DEEP RIFTS

After Saturday's talks, Mursi issued a new decree in which the first article "cancels the constitutional declaration" announced on November 22, the spokesman for the dialogue, Mohamed Selim al-Awa, told a news conference held around midnight.

But he said the constitutional referendum would go ahead anyway next Saturday, adding that although those at the meeting discussed a postponement, there were legal obstacles to a delay.

The political turmoil has exposed deep rifts in the nation of 83 million between Islamists, who were suppressed for decades, and their rivals, who fear religious conservatives want to squeeze out other voices and restrict social freedoms. Many Egyptian just crave stability and economic recovery.

Islamists and more liberal-minded opponents have each drawn tens of thousands of supporters to the streets in rival rallies since the November 22 decree. Mursi's opponents have chanted for his downfall while Islamists have said there is a conspiracy to bring down the nation's first freely elected president.

The National Salvation Front, whose members include Nobel Peace Prize laureate Mohamed ElBaradei and former foreign minister Amr Moussa, stayed away from Saturday's talks.

Ahead of stating its formal position, Front spokesman Hussein Abdel Ghani said: "My first personal impression is that it is a limited and insufficient step. We repeatedly said that among our top demands is for the referendum to be delayed."

Despite such opposition, Mursi is gambling he can push through the constitution via referendum with the backing of loyal Islamists and many Egyptians who are desperate to move on. Only after a constitution is in place can an election be held for a new parliament, expected about two months later.

The Islamist-led lower house of parliament elected this year was dissolved after a few months by a court order.

DISTRUST

The new decree removed some parts of the old decree that angered the opposition, including an article that had given Mursi broad powers to confront threats to the revolution or the nation, wording opponents said gave him arbitrary authority.

Another article in the old decree had put beyond legal challenge any decision taken by the president until a new parliament was elected, reflecting Mursi's distrust of a judiciary largely unreformed from Mubarak's era.

That article was not repeated, but the new decree said "constitutional declarations including this declaration" were beyond judicial review.

The new decree outlined steps for setting up an assembly to draft a new constitution should the current draft be rejected.

Further, the opposition was invited to offer suggested changes to the new constitution, echoing an earlier initiative by Mursi's team for amendments to be discussed and agreed on by political factions and put to the new parliament to approve.

Amid the violence and political bickering, the army has cast itself primarily as the neutral guarantor of the nation.

"The armed forces affirm that dialogue is the best and only way to reach consensus," the military statement said. "The opposite of that will bring us to a dark tunnel that will result in catastrophe and that is something we will not allow."

The army might be pushing the opposition to join dialogue and for Mursi to do more to draw them in, said Hassan Abu Taleb of the Al Ahram Center for Political and Strategic Studies.

He discounted the chance of direct military intervention. "They realize that interfering again in a situation of civil combat will squeeze them between two rocks," he added.

But the military seemed poised to take a more active role in security arrangements for the approaching referendum.

A cabinet source said the cabinet had discussed reviving the army's ability to make arrests if it were called upon to back up police, who are normally in charge of election security.

According to the state-run daily newspaper al-Ahram, an expanded military security role might extend to the next parliamentary election and, at the president's discretion, even beyond that.

(Additional reporting by Tamim Elyan; Writing by Edmund Blair; Editing by Mark Heinrich)

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