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Huge crowds rally in Egypt, political process blocked

CAIRO (Reuters) - Hundreds of thousands of supporters and opponents of ousted Egyptian President Mohamed Mursi gathered in Cairo and Alexandria on Sunday, two days after similar gatherings led to nationwide clashes that claimed more than 30 lives.

The huge crowds, likely to stay out on the streets until the early hours, raised the risk of further violence while a military-driven plan to resolve the political crisis remained mired in mistrust and confusion, dashing hopes of a quick fix.

Protesters opposed to Mursi crammed into Cairo's Tahrir Square and at the presidential palace in a festive atmosphere. Unlike Friday there were no running street battles with Mursi's supporters and soldiers, despite a much bigger turnout.

Those who backed Mursi and his Muslim Brotherhood movement concentrated in vast numbers outside a mosque in the northeast of the city, and outside the Republican Guard barracks where Mursi was being held and three people were killed on Friday.

"We will not leave until Mursi returns. Otherwise we'll die as martyrs," said 55-year-old Hanim Ahmad Ali Al-Sawi, wearing a veil over her face in the searing sun, as soldiers and policemen looked on from behind barbed wire. She had been there with her five children for the last three days.

Mursi was toppled on Wednesday in a takeover the military denied was a coup. The army said it stepped in to enforce the will of millions of Egyptians who rallied on June 30 demanding his resignation.

But while Mursi's ouster was met with scenes of jubilation, it angered Islamists who held protests on Friday in which some 1,400 people were wounded in addition to those killed.

In Alexandria, where 14 people died on Friday, clashes broke out again, but there were no immediate reports of casualties.

The violence across the Arab world's most populous state saw rival factions fighting street battles in central Cairo and many others cities and towns, and underlined the pressing need for a swift and inclusive political solution.

Egypt's allies in the West, including main aid donors the United States and the European Union, and in Israel, with which Egypt has had a U.S.-backed peace treaty since 1979, have looked on with increasing alarm.

CROWDS SWELL AT DUSK

As darkness fell, anti-Mursi demonstrators packet Tahrir Square, the cradle of the movement to unseat him, which holds some 350,000, spilling out into adjoining streets and squares.

There were loud cheers when military jets left trails in the sky that formed the shape of a heart above the square, a tactic employed by the military for the last three days to underscore their authority. A troupe of folk musicians played darabukka drums and mizmar flutes in a celebratory atmosphere.

On the other side of the city, tens of thousands more anti-Brotherhood protesters had gathered outside the presidential palace.

Mohamed Manndouh, a 21-year-old business studies student, reflected the mood among many who back the military intervention. "I came out to protest today because we reject the terror of the Brotherhood," he said near Tahrir Square.

Many tens of thousands of men, women and children gathered at a Brotherhood sit-in near the mosque, where some have braved the heat since Wednesday.

Soldiers searched people before they entered the area.

Ahmad Sobhi, 28, a theology graduate from the Islamic Azhar university, said he had been protesting in Cairo since June 28.

"We took democratic steps, we voted on the constitution and for the president. We progressed. Now we're back to square one."

For many Islamists, the overthrow of Egypt's first freely elected president was a bitter reversal that raised fears of a return to the suppression they endured for decades under autocratic rulers like Hosni Mubarak, himself toppled in the 2011 Arab Spring uprisings.

POLITICAL IMPASSE

The transitional authorities had been set to appoint liberal politician Mohamed ElBaradei, a favourite of young anti-Mursi protest leaders, before his candidacy was thrown into doubt when a hardline Islamist party objected.

The abrupt U-turn due to opposition from the Nour Party, Egypt's second Islamist force after the Brotherhood, highlighted the challenge the military faces in finding consensus among liberals and conservatives on who should run the country and what direction they should lead it in.

"We extend our hand to everyone," a presidential spokesman told reporters late on Saturday. "The Muslim Brotherhood has plenty of opportunities to run for all elections including the coming presidential elections or the ones to follow."

Minutes after he spoke, state media reported that the public prosecutor had ordered four top Brotherhood leaders arrested this week to be detained for a further 15 days on accusations of inciting violence against protesters.

Authorities sealed the burned-out national headquarters of the Brotherhood, and the offices of its political arm, the Freedom and Justice Party, as part of the investigation.

The Brotherhood has said it wants nothing to do with the military's plans for a new interim government. It wants Mursi reinstated and has pledged to keep protesting until he is.

The military has shown no sign of moving to dislodge the Islamists and may be hoping that sweltering summer heat and the onset of the Ramadan Muslim fasting month from Tuesday will gradually wear them down.

The Nour Party, the Brotherhood's rival for the Islamist vote, had agreed to the army-backed transition plan leading to new elections. Its withdrawal from the process would strip that plan of Islamist legitimacy.

U.S. CONDEMNATION

On Saturday, President Barack Obama condemned the violence and said the United States was not working with any particular party or group in Egypt.

Washington has not condemned the military takeover or called it a coup, prompting suspicion within the Brotherhood that it tacitly supports the overthrow.

Obama has ordered a review to determine whether annual U.S. assistance of $1.5 billion, most which goes to the Egyptian military, should be cut off as required by law if a country's military ousts a democratically elected leader.

But U.S. lawmakers said that was unlikely to happen.

"We should continue to support the military, the one stabilizing force in Egypt that I think can temper down the political feuding," U.S. Representative Mike Rogers said on CNN's "State of the Union".

Egypt can ill afford to lose foreign aid. The country appears headed for a looming funding crunch unless it can quickly access money from overseas. The local currency has lost 11 percent of its value since late last year.

The governor of Egypt's central bank, Hisham Ramez, flew to Abu Dhabi on Sunday, officials at Cairo airport said, following Egyptian media reports Cairo was seeking financial aid from Gulf states after Mursi was toppled.

Egypt's foreign reserves fell $1.12 billion in June to $14.92 billion, representing less than three months of imports.

Only about half are in the form of cash or in securities that can easily be spent, and the IMF considers three months to be the minimum safe cushion for reserves. (Additional reporting by Asma Alsharif, Mike Collett-White, Alexander Dziadosz, Maggie Fick, Tom Finn, Sarah McFarlane, Tom Perry, Yasmine Saleh, Paul Taylor and Patrick Werr in Cairo and Steve Holland and Patrick Temple-West in Washington; Writing by Mike Collett-White; editing by Philippa Fletcher)