Sixteen shot dead in pro-Mursi rally -state TV

CAIRO - At least 16 people were killed on Wednesday and 200 wounded when gunmen opened fire on supporters of President Mohamed Mursi who were rallying outside Cairo University, state television quoted a Health Ministry spokesman as saying.

Security sources said pro-Mursi demonstrators clashed with security forces. They put the death toll at 18 and said most of the casualties were Islamists.

Witnesses said they heard shotgun and rifle fire. "Police attacked the protesters in their uniforms, using state-issued machine guns and ammunition," said Gehad El-Haddad, spokesman for the Muslim Brotherhood.

(Reporting by Yasmine Saleh/Maggie Fick; editing by Mark Heinrich)

Egypt pound weakens at central bank forex auction

CAIRO - The Egyptian pound inched weaker at a central bank foreign exchange auction, which was held early ahead of a Wednesday army deadline that could trigger a military takeover.

The central bank sold $38.8 million to banks at the auction, with the cut-off price at 7.0189 pounds to the dollar compared to 7.0094 pounds at the last auction on Thursday, a banker said.

The central bank introduced the auctions at the end of December to help stave off a currency crisis and thwart a run on the pound. Since then, it has allowed the currency to lose almost 11 percent of its value on the official market. The pound has fallen by even more on the black market.

(Reporting by Patrick Werr; Editing by Asma Alsharif)

Mursi's hardline allies call for early presidential vote

CAIRO - Egyptian President Mohamed Mursi's hardline Islamist allies in al-Gamaa al-Islamiya want him to call a referendum on early presidential elections to avoid bloodshed and a military coup, Tarek al-Zumar, a senior member of the group said on Wednesday.

The former armed group that is one of Mursi's few remaining allies has been advising the head of state to call for the vote in the two days since the army issued a deadline for politicians to resolve the political conflict by Wednesday.

"We find ourselves faced with the necessity of convincing the president to accept a referendum on early presidential elections," Zumar told Reuters in a telephone interview. "This is what we hope will be reached in the next few hours."

Mursi did not propose the idea of an early presidential election a speech to the nation on Tuesday, calling instead for parliamentary polls.

"This peaceful, constitutional transfer (of power) will spare blood," Zumar said, adding that it would also protect the constitution that was passed into law in December.

He said the army's statements appeared to presage a coup, but this "can be avoided if the president decides to hold a referendum on early presidential elections".

Asked if he feared more violence unless a solution is agreed, Zumar said: "Of course, there are many parties that playing with Egypt's security, and which want to exploit the current moment to set off sectarian struggles and civil wars."

The Gamaa Islamiya, which renounced the armed struggle more than a decade ago and formed a political party after the 2011 uprising that overthrew Hosni Mubarak, has taken part in recent rallies in support Mursi.

The president's appointment of a Gamaa Islamiya member as governor of the historic central city of Luxor, where the group staged its bloodiest attack on foreign tourists in 1997, fuelled anger at Mursi ahead of protests demanding he resign.

(Reporting by Tom Perry; Editing by Paul Taylor)

Egypt's Mursi to resign or be sacked on Wednesday: Al-Ahram

Egypt's state-run Al-Ahram newspaper said it expected President Mohamed Mursi would either step down or be removed from office on Wednesday when a deadline set by the army for resolving the country's political crisis expires.

Egypt's flagship state daily said an army road map for the future would set up a three-member presidential council to be chaired by the head of the Supreme Constitutional Court.

"Al-Ahram learnt that with the end of the 48-hour period set by the armed forces ... it is expected in the hours that follow it, one of two things: either Mursi announces his resignation himself, or the declaration of his removal through the road map for the future set out by the armed forces," it said.

Al-Ahram said the road map would set up a neutral transitional government to be headed by a military leader. The transitional period would last nine to 12 months in which a new constitution would be drafted to set out a path to presidential elections.

(Writing by Tom Perry/Shaimaa Fayed; Editing by Alison Williams)

Egypt army says ready to die in 'final hours'

Egypt's high command said on Wednesday the army was ready to die to defend Egypt's people against terrorists and fools, in a response to Islamist President Mohamed Mursi that was headlined "The Final Hours".

The post on the official Facebook page of the Supreme Council of the Armed Forces (SCAF), headed by armed forces chief General Abdel Fattah al-Sisi, said: "We swear to God that we will sacrifice even our blood for Egypt and its people, to defend them against any terrorist, radical or fool."

Issued three hours after Mursi appeared on television to reject an ultimatum from Sisi that he share power with his opponents or face a military solution by 10:00 a.m. EDT (1500 GMT), a military source said the statement made clear that the armed forces would not abandon their demands.

(Reporting by Yasmine Saleh; Editing by Alastair Macdonald)

Reader note: the following is a developing summary of translated statements made by Egypt's President Mursi. We will have a confirmed and updated story shortly:

President Mursi, on television in Egypt, says he is the first democratically elected leader of Egypt and that elections have been free and representative of the popular will.

In speech, Mursi says that corruption, remnants of old regime remain challenges for Egypt and it takes time to address them. He also says that he is working under the sole legitimacy of the constitution, and that only that legitimacy guarantees there will be no civil unrest. Mursi says he has no option but to carry out responsibilities given to him democratically.

Mursi, continuing in live speech, urges Egyptians not to attack the army, police, or each other. Mursi says he is trying to get Egypt's army to return to its normal duties.

"There is no substitute for constitution and legal legitimacy," Mursi says. "No one has a right to replace the legitimate order."

Mursi to speak to Egyptians shortly -state TV

Reporting by Yasmine Saleh; Editing by Alastair Macdonald

CAIRO, July 2 (Reuters) - Egyptian President Mohamed Mursi will address the nation shortly, state television said on Tuesday in an on-screen alert. No details were available. Mursi earlier sent a tweet defying an ultimatum from the armed forces that he share power with his opponents.

Readers, below is the original tweet from earlier today by Egypt's president.

Egypt army plans for after Mursi as clock ticks

By Yasmine Saleh and Asma Alsharif

Egypt's army has plans to push Mohamed Mursi aside and suspend the constitution after an all but impossible ultimatum it has given the Islamist president expires in less than 24 hours, military sources told Reuters on Tuesday.

Condemning a coup against their first freely elected leader, tens of thousands of Mursi's Muslim Brotherhood supporters took to the streets, clashing with opponents in several towns. But they appeared to be dwarfed by anti-government protesters who turned out in their hundreds of thousands across the nation.

Troops were on alert after warnings of a potential civil war. Seven people died in fighting in Cairo suburbs and hundreds were wounded in the provinces.

Read on.