CAIRO (Reuters) - Egyptian President Mohamed Mursi returned to work on Wednesday a day after slipping out of his palace when it came under siege from protesters furious at his drive to push through a new constitution after temporarily expanding his own powers.
The Health Ministry said 35 protesters were wounded and the Interior Ministry said 40 policemen were hurt in clashes around the presidential palace on Tuesday. While they fired tear gas when protesters breached barricades to reach the palace walls, riot police appeared to handle the disturbance with restraint.
A presidential source said Mursi was back in his office even though up to 200 demonstrators had camped out near one entrance to the palace in the northern Cairo district of Heliopolis overnight. Traffic was flowing normally in the area where thousands of people had protested the night before, and riot police had been withdrawn, a Reuters witness said.
The rest of the Egyptian capital Cairo was calm, despite the political furore over Mursi's November 22 decree handing himself wide powers and shielding his decisions from judicial oversight.
The Islamist leader says he acted to prevent courts from derailing a newly drafted constitution that will go to a referendum on December 15, after which Mursi's decree will lapse.
"Our demands from the president: retract the presidential decree and cancel the referendum on the constitution," read a placard hung by demonstrators on a palace gate.
The crowds had gathered in what organizers had dubbed a "last warning" to Mursi. "The people want the downfall of the regime!" they chanted, roaring the signature slogan of last year's uprising that ousted President Hosni Mubarak.
But the "last warning" may turn out to be one of the last gasps for a disparate opposition which has little chance of stopping next week's vote on a constitution drafted over six months and swiftly approved by an Islamist-dominated assembly.
Facing the gravest crisis of his six-month-old tenure, the Islamist president has shown no sign of buckling under pressure, confident that the Muslim Brotherhood and its Islamist allies can win the referendum and a parliamentary election to follow.
Many Egyptians yearn for an end to political upheaval that has scared off investors and tourists, worsening an economic crisis.
COURT PROTEST
Dozens of pro-Mursi demonstrators, watched by equal numbers of police, waved flags outside the Supreme Constitutional Court, whose rulings have complicated the Islamists' rise to power.
"You are not a political agency," read one banner held by the demonstrators, addressing a court that in June ordered the dissolution of the Islamist-led lower house of parliament.
Mursi issued his November 22 decree temporarily putting his actions above the law to forestall any court ruling to dissolve the upper house or the assembly that wrote the constitution.
Now that the document has been approved and preparations for the referendum are under way, it is not clear whether the president might roll back his decree as a sop to the opposition.
State institutions, with the partial exception of the judiciary, have mostly fallen in behind Mursi, who emerged from the Muslim Brotherhood to win a free election in June.
The army, which backed all Egypt's previous presidents in the republic's six-decade history, has gone back to barracks, having apparently lost its appetite to intervene in politics.
In a bold move, Mursi sacked Mohamed Hussein Tantawi, the Mubarak-era army commander and defense minister, in August and removed the sweeping powers that the military council which took over after Mubarak's fall had grabbed two months earlier.
The liberals, leftists, Christians, ex-Mubarak followers and others opposed to the president who was narrowly elected in June against a secular rival have yet to generate a mass movement or a grassroots political base to challenge the Brotherhood.
Protesters have scrawled "leave" over Mursi's palace walls, but the president has made clear he is not going anywhere.
"The crisis we have suffered for two weeks is on its way to an end, and very soon, God willing," Saad al-Katatni, head of the Brotherhood's Freedom and Justice Party, told Reuters on Tuesday, saying approval of the constitution in the forthcoming referendum would end the turmoil set off by Mursi's decree.
The Islamic Forces Coalition, which includes the Brotherhood, Salafis and other Islamic parties, condemned the "insulting" demonstrations outside the presidential palace.
"We remind (opposition figures) that the deciding factor in these differences is what the ballot boxes say, not what sabotage attempts create," it said in a statement.
Investors have seized on hopes that Egypt's turbulent transition, which has buffeted the economy for two years, may now be heading for calmer waters, sending stocks 1 per cent higher in early trading after a 3.5 percent rally on Tuesday.
The most populous Arab nation has turned to the IMF for a $4.8 billion loan to help it out of a crisis that has depleted its foreign currency reserves.
The government said on Wednesday the process was on track and Egypt's request would go to the IMF board as expected.
(Additional reporting by Tom Perry; Writing by Alistair Lyon; Editing by Mark Heinrich)
