* Opponents say Mursi's decree must be cancelled
* Protesters say demonstrations will go on
* Islamists call off rival protest on Tuesday
(Adds presidential statement after talks with judges)
CAIRO, Nov 26 (Reuters) - Egypt's ruling Islamists tried to
defuse a political crisis on Monday, with President Mohamed
Mursi backing a compromise over his seizure of extended powers
and his Muslim Brotherhood calling off a planned demonstration.
Mursi provoked outrage last week that led to violent
protests when he issued a decree that put beyond judicial review
any decision he takes until a new parliament is elected, drawing
charges he had given himself the powers of a modern-day pharaoh.
Opponents plan to go ahead with a big demonstration on
Tuesday to demand he scrap the decree, threatening more turmoil
for a nation that has been stumbling towards democracy for
almost two years since president Hosni Mubarak was ousted.
However, the Brotherhood, which was behind Mursi's election
win in June, said it had called off a rival protest also planned
for Tuesday in Cairo. Violence has flared when both sides turned
out in the past.
Mursi's opponents have accused him of behaving like a
dictator and the West has voiced its concern, worried by more
turbulence in a country that has a peace treaty with Israel and
lies at the heart of the Arab Spring.
Mursi held crisis talks with members of the Supreme Judicial
Council, the nation's highest judicial body, to resolve the
crisis over the decree that was seen as targetting in part a
legal establishment still largely unreformed from Mubarak's era.
The council had proposed he limit the scope of decisions
that would be immune from judicial review to "sovereign
matters", language the presidential spokesman said Mursi backed.
"The president said he had the utmost respect for the
judicial authority and its members," spokesman Yasser Ali told
reporters in announcing the agreement.
After reading out the statement outlining what was agreed
with judges, Ali told Reuers: "The statement I read is an
indication that the issue is resolved."
PROTEST GOES ON
Protesters camped out in Cairo's Tahrir Square since Friday
to demand that the decree be scrapped said the president had not
done enough to defuse the row. "We reject the constitutional
declaration (decree) and it must be completely cancelled," said
Sherif Qotb, 37, protesting amongst tents erected in the square.
Mursi's administration has defended his decree as an effort
to speed up reforms and complete a democratic transformation.
Leftists, liberals, socialists and others say it has exposed the
autocratic impulses of a man once jailed by Mubarak.
Mona Amer, spokesman for the opposition movement Popular
Current, said Tuesday's protest would go on. "We asked for the
cancellation of the decree and that did not happen," she said.
Protesters are worried that the Muslim Brotherhood aims to
dominate the post-Mubarak era after winning the first democratic
parliamentary and presidential elections this year.
The crisis has exposed a rift between Islamists and their
opponents. One person has been killed and about 370 injured in
violence since Mursi issued Thursday's decree, emboldened by
international praise for brokering an end to eight days of
violence between Israel and Hamas in Gaza.
Before the president's announcement, leftist politician
Hamdeen Sabahy said protests would continue until the decree was
scrapped and said Tahrir would be a model of an "Egypt that will
not accept a new dictator because it brought down the old one".
As well as shielding his decisions from judicial review,
Mursi's decree protected an Islamist-dominated assembly drawing
up a new constitution from legal challenge. Liberals and others
say their voices are being ignored in that assembly, and many
have walked out.
Only once a constitution is written can a new parliamentary
election be held. Until then, legislative and executive power
remains in Mursi's hands.
Though both Islamists and their opponents broadly agree that
the judiciary needs reform, his rivals oppose Mursi's methods.
The Supreme Constitutional Court was responsible for
declaring the Islamist-dominated parliament void, leading to its
dissolution this year. One presidential source said Mursi was
looking for ways to reach a deal to restructure that court.
"The president and the Supreme Judicial Council confirmed
their desire for no conflict or difference between the judicial
and presidential authorities," spokesman Ali said.
The council had sought to defuse anger in the judiciary by
urging some judges and others who had gone on strike to return
to work and by proposing the idea that only decisions on
"sovereign matters" be immune from legal challenge.
Legal experts said "sovereign matters" could be confined to
issues such as declaring war or calling elections that are
already beyond legal review. But they said Egypt's legal system
had sometimes used the term more broadly, suggesting that the
wording leaves wide room for interpretation.
A group of lawyers and activists has also already challenged
Mursi's decree in an administrative court, which said it would
hold its first hearing on Dec. 4. Other decisions by Mursi have
faced similar legal challenges brought to court by opponents.
Mursi's office repeated assurances that the steps would be
temporary, and said he wanted dialogue with political groups to
find "common ground" over what should go into the constitution.
The president's calls for dialogue have been rejected by
members of the National Salvation Front, a new opposition
coalition of liberals, leftists and other politicians and
parties, who until Mursi's decree had been a fractious bunch
struggling to unite.
The Front includes Sabahy, Nobel Peace Prize laureate
Mohamed ElBaradei and former Arab League chief Amr Moussa.
The military has stayed out of the crisis after leading
Egypt through a messy 16-month transition to a presidential
election in June. Analysts say Mursi neutralised the army when
he sacked top generals in August, appointing a new generation
who now owe their advancement to the Islamist president.
Though the military still wields influence through business
interests and a security role, it is out of frontline politics.
(Writing by Edmund Blair, Additional reporting by Yasmine
Saleh; editing by David Stamp)