Miscalculation

"There are signs that over the last couple of days that Morsi and the Brotherhood realised their mistake," said Elijah Zarwan, a fellow with The European Council on Foreign Relations. He said the protests were "a very clear illustration of how much of a political miscalculation this was".

Morsi's move provoked a rebellion by judges and has battered confidence in an economy struggling after two years of turmoil. The president still must implement unpopular measures to rein in Egypt's crushing budget deficit - action needed to finalise a deal for a $4.8 billion International Monetary Fund loan.

A general view of anti-Mursi protesters gathering at Tahrir Square in Cairo Nov 27, 2012. [Photo/Agencies]

Some protesters have been camped out since Friday in Tahrir and violence has flared around the country, including in a town north of Cairo where a Muslim Brotherhood youth was killed in clashes on Sunday. Hundreds have been injured.

Supporters and opponents of Morsi threw stones at each other and some hurled petrol bombs in the Delta city of el-Mahalla el-Kubra. Medical sources said almost 200 people were injured.

"The main demand is to withdraw the constitutional declaration (decree). This is the point," said Amr Moussa, a former Arab League chief and presidential candidate who has joined the new opposition coalition, the National Salvation Front. The group includes several top liberal politicians.

Some scholars from the prestigious al-Azhar mosque and university joined Tuesday's protest, showing that Morsi and his Brotherhood have alienated some more moderate Muslims. Members of Egypt's large Christian minority also joined in.

Morsi formally quit the Brotherhood on taking office, saying he would be a president for all Egyptians, but he is still a member of its Freedom and Justice Party.

The decree issued on Thursday expanded his powers and protected his decisions from judicial review until the election of a new parliament, expected in the first half of 2013.

In Washington, White House spokesman Jay Carney urged demonstrators to behave peacefully.

"The current constitutional impasse is an internal Egyptian situation that can only be resolved by the Egyptian people, through peaceful democratic dialogue," he told reporters.

UN Secretary-General Ban Ki-moon told an Austrian paper he would encourage Morsi to resolve the issue by dialogue.

Decree's scope debatable

Trying to ease tensions with judges, Morsi assured Egypt's highest judicial authority that elements of his decree giving his decisions immunity applied only to matters of "sovereign" importance. That should limit it to issues such as declaring war, but experts said there was room for interpretation.

In another step to avoid more confrontation, the Muslim Brotherhood cancelled plans for a rival mass rally in Cairo on Tuesday to support the decree. Violence has flared in Cairo in the past when both sides have taken to the streets.

But there has been no retreat on other elements of the decree, including a stipulation that the Islamist-dominated body writing a new constitution be protected from legal challenge.

"The decree must be cancelled and the constituent assembly should be reformed. All intellectuals have left it and now it is controlled by Islamists," said 50-year-old Noha Abol Fotouh.

With its popular legitimacy undermined by the withdrawal of most of its non-Islamist members, the assembly faces a series of court cases from plaintiffs who say it was formed illegally.

Morsi issued the decree on Nov 22, a day after he won US and international praise for brokering an end to eight days of violence between Israel and Hamas around the Gaza Strip.

Morsi's decree was seen as targeting in part a legal establishment still largely unreformed from Mubarak's era, when the Brotherhood was outlawed.

Though both Islamists and their opponents broadly agree that the judiciary needs reform, Morsi's rivals oppose his methods.

Rulings from an array of courts this year have dealt a series of blows to the Brotherhood, leading to the dissolution of the first constitutional assembly and the lower house of parliament elected a year ago. The Brotherhood dominated both.

The judiciary blocked an attempt by Morsi to reconvene the Brotherhood-led parliament after his election victory. It also stood in the way of his attempt to sack the prosecutor general, another Mubarak holdover, in October.

In his decree, Morsi gave himself the power to sack that prosecutor and appoint a new one. In open defiance of Morsi, some judges are refusing to acknowledge that step.