ECB forecast cuts send oil lower

NEW YORK: Oil prices sank along with the euro Thursday after the European Central Bank forecast that the eurozone would continue to contract next year and only return to growth in 2014.

New York's main contract, WTI crude for delivery in January, recoiled $1.62 to $86.26 a barrel.

In London trade, Brent North Sea crude for January dived $1.78 to $107.03 a barrel.

The falls paralleled that of the euro, which sank about 0.8 percent after the ECB announcements following its policy board meeting.

In its regular quarterly staff economic projections, the ECB forecast that the euro area economy will shrink by 0.5 percent in 2012 and another 0.3 percent in 2013, instead of growing by 0.5 percent next year as previously estimated.

The Frankfurt-based central bank also opted not to cut its benchmark interest rate, but ECB chief Mario Draghi left the door open for one in the future.

"Crude oil extended its losses today on a combination of technical selling and growth concerns after the ECB trimmed its GDP forecasts for the eurozone," said analyst Fawad Razaqzada at trading group GFT Markets.

No break in the impasse over the fiscal cliff in Washington meanwhile kept a cloud over the oil market in afternoon trade.

Congress and the White House have until the end of the month to come up with new legislation to avert the harsh spending cuts and tax hikes programmed for January under the "cliff" package.

-AFP/ac

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NH8 stretch on Delhi-Gurgaon border is India’s deadliest road

NEW DELHI: Perhaps, the deadliest stretch in the country falls on the Delhi-Gurgaon border on NH8. Data available with TOI shows that 260 lives were lost on this 40-km stretch last year.

While the Gurgaon section killed 160 people in 2011, another 100 died in road crashes on Kapdiwas border and Daruhera stretch. The high rate of fatalities has exposed how safety of road users has been the lowest priority in comparison to sustained focus on adding lanes to existing highways to ramp up their capacity. In the past 10 months, the Gurgaon portion of the highway has recorded 121 deaths. All stretches, barring the Manesar-Kapdiwas stretch in Gurgaon, recorded high number of fatalities this year in comparison to 2011.

While the 27.7km Delhi-Gurgaon border-Kherki Dhaula stretch has been developed as an expressway, the rest is being expanded to six lanes. Road safety experts have been raising alarm that the safety apparatus have been missing on almost all highway stretches, which are under expansion programme and in the case of already constructed ones there are utter lack of adequate facilities for safe passage of pedestrians and movement of local traffic.

Taking note of the trend, the highways ministry has identified Rajeev Chowk and Hero Honda crossings in Gurgaon as major black spots.

It has also worked out a strategy to rectify the engineering faults, including placing proper signage, to make them safer.

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Celebrations planned as Wash. legalizes marijuana

SEATTLE (AP) — Legal marijuana possession becomes a reality under Washington state law on Thursday, and some people planned to celebrate the new law by breaking it.

Voters in Washington and Colorado last month made those the first states to decriminalize and regulate the recreational use of marijuana. Washington's law takes effect Thursday and allows adults to have up to an ounce of pot — but it bans public use of marijuana, which is punishable by a fine, just like drinking in public.

Nevertheless, some people planned to gather at 12:01 a.m. PST Thursday to smoke in public beneath Seattle's Space Needle. Others planned a midnight party outside the Seattle headquarters of Hempfest, the 21-year-old festival that attracts tens of thousands of pot fans every summer.

"This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow."

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

That law also takes effect Thursday, when gay and lesbian couples can start picking up their wedding certificates and licenses at county auditors' offices. Those offices in King County, the state's largest and home to Seattle, and Thurston County, home to the state capital of Olympia, planned to open the earliest, at 12:01 a.m. Thursday, to start issuing marriage licenses. Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

The Seattle Police Department provided this public marijuana use enforcement guidance to its officers via email Wednesday night: "Until further notice, officers shall not take any enforcement action — other than to issue a verbal warning — for a violation of Initiative 502."

Thanks to a 2003 law, marijuana enforcement remains the department's lowest priority. Even before I-502 passed on Nov. 6, police rarely busted people at Hempfest, despite widespread pot use, and the city attorney here doesn't prosecute people for having small amounts of marijuana.

Officers will be advising people to take their weed inside, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to."

Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

"The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress" — a non-issue, since the measures passed in Washington and Colorado don't "nullify" federal law, which federal agents remain free to enforce.

The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Colorado's measure, as far as decriminalizing possession goes, is set to take effect by Jan. 5. That state's regulatory scheme is due to be up and running by October 2013.

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Johnson can be reached at https://twitter.com/GeneAPseattle

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McAfee Mystery Deepens With Possible Heart Attack

Software millionaire John McAfee has been taken to a Guatemala City hospital via ambulance after suffering a possible heart attack at the detention center where he is being held.

McAfee, 67 -- who may soon be deported back to Belize, where authorities want to question him about the shooting death of his neighbor -- was reportedly prostrate on the floor of his cell and unresponsive. He was wheeled into the hospital on a gurney, but when nurses began removing his suit, he became responsive and said, "Please, not in front of the press."

Earlier today, McAfee had complained of chest pains.

McAfee was scheduled to be deported to Belize later this morning, ABC News has learned. But a judge could stay the ruling if it is determined that McAfee's life is threatened by being in Belizean custody, as McAfee has claimed in the past several weeks.

Raphael Martinez, a spokesman for the Belize government, said that if McAfee is deported to Belize, he would immediately be handed over to police and detained for up to 48 hours unless charges are brought against him.

"There is more that we know about the investigation, but that remains part of the police work," he said, hinting at possible charges.

He added that a handover by Guatemala would be "the neighborly thing to do."

A spokesman for the U.S. embassy in Guatemala said that "due to privacy considerations," the embassy would "have no comment on the specifics of this situation," but that, "U.S. citizens are subject to the laws of the countries in which they are traveling or residing, and must work within the host countries' legal framework."

Just hours before McAfee's arrest, he told ABC News in an exclusive interview Wednesday he would be seeking asylum in Guatemala. McAfee was arrested by the Central American country's immigration police and not the national police, said his attorney, who was confident his client would be released within hours.

Guatemala's National Police/AP Photo

Software Founder Breaks Silence: McAfee Speaks on Murder Allegations Watch Video

John McAfee Interview: Software Mogul Leaves Belize Watch Video

"Thank God I am in a place where there is some sanity," said McAfee before his arrest. "I chose Guatemala carefully."

McAfee said that in Guatemala, the locals aren't surprised when he says the Belizean government is out to kill him.

"Instead of going, 'You're crazy,' they go, 'Yeah, of course they are,'" he said. "It's like, finally, I understand people who understand the system here."

But McAfee added he has not ruled out moving back to the United States, where he made his fortune as the inventor of anti-virus software, and that despite losing much of his fortune he still has more money than he could ever spend.

In his interview with ABC News, a jittery, animated but candid McAfee called the media's representation of him a "nightmare that is about to explode," and said he's prepared to prove his sanity.

McAfee has been on the run from police in Belize since the Nov. 10 murder of his neighbor, fellow American expatriate Greg Faull.

During his three-week journey, said McAfee, he disguised himself as handicapped, dyed his hair seven times and hid in many different places during his three-week journey.

He dismissed accounts of erratic behavior and reports that he had been using the synthetic drug bath salts. He said he had never used the drug, and said statements that he had were part of an elaborate prank.

Investigators said that McAfee was not a suspect in the death of the former developer, who was found shot in the head in his house on the resort island of San Pedro, but that they wanted to question him.

McAfee told ABC News that the poisoning death of his dogs and the murder just hours later of Faull, who had complained about his dogs, was a coincidence.

McAfee has been hiding from police ever since Faull's death -- but Telesforo Guerra, McAfee's lawyer in Guatemala, said the tactic was born out of necessity, not guilt.

"You don't have to believe what the police say," Guerra told ABC News. "Even though they say he is not a suspect they were trying to capture him."

Guerra, who is a former attorney general of Guatemala, said it would take two to three weeks to secure asylum for his client.

According to McAfee, Guerra is also the uncle of McAfee's 20-year-old girlfriend, Samantha. McAfee said the government raided his beachfront home and threatened Samantha's family.

"Fifteen armed soldiers come in and personally kidnap my housekeeper, threaten Sam's father with torture and haul away half a million dollars of my s***," claimed McAfee. "If they're not after me, then why all these raids? There've been eight raids!"

Before his arrest, McAfee said he would hold a press conference on Thursday in Guatemala City to announce his asylum bid. He has offered to answer questions from Belizean law enforcement over the phone, and denied any involvement in Faull's death.

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Military halts clashes as political crisis grips Egypt

CAIRO (Reuters) - Egypt's Republican Guard restored order around the presidential palace on Thursday after clashes killed seven people, but passions ran high in a contest over the country's future.

President Mohamed Mursi had been due to address the nation, but a presidential source said the Islamist leader, criticized by his opponents for his silence in the last few days, might speak on Friday instead. He did not explain the possible delay.

Mursi supporters withdrew before a mid-afternoon deadline set by the Republican Guard, an elite unit whose duties include protecting the palace. Opposition protesters remained, kept away by a barbed wire barricade guarded by tanks, and by evening their numbers had swelled to a few thousand.

The military played a big role in removing President Hosni Mubarak during last year's popular revolt, taking over to manage a transitional period, but had stayed out of the latest crisis.

Thousands of Mursi's Islamist partisans fought protesters well into Thursday's early hours during dueling demonstrations over the president's November 22 decree to expand his powers to help him push through a mostly Islamist-drafted constitution.

Officials said seven people were killed and 350 wounded in the violence, for which each side blamed the other. Six of the dead were Mursi supporters, the Muslim Brotherhood said.

The street clashes reflected a deep political divide in the most populous Arab nation, where contrasting visions of Islamists and their liberal rivals have complicated a struggle to embed democracy after Mubarak's 30 years of one-man rule.

The United States, worried about the stability of an Arab partner which has a peace deal with Israel and which receives $1.3 billion a year in U.S. military aid, has urged dialogue.

Prosecutors investigating the unrest said Brotherhood members had detained 49 wounded protesters and were refusing to release them to the authorities, the state news agency said.

"MILITIA REGIME"

The Brotherhood's spokesman Mahmoud Ghozlan denied this, saying all "thugs" detained by members of the Islamist group had been handed over to the police or the Republican Guard.

Opposition factions called for mass protests after Friday prayers aimed at "the downfall of the militia regime", a dig at what they see as the Brotherhood's organized street muscle.

A communique from a leftist group urged protesters to gather at mosques and squares across Egypt, and to stage marches in Cairo and its sister city Giza converging on the presidential palace. "Egyptian blood is a red line," the communique said.

Hardline Islamist Salafis urged their supporters to protest against what they consider biased coverage of the crisis by some private Egyptian satellite television channels.

The commander of the Republican Guard said deployment of tanks and troop carriers around the presidential palace was intended to separate the adversaries, not to repress them.

"The armed forces, and at the forefront of them the Republican Guard, will not be used as a tool to oppress the demonstrators," General Mohamed Zaki told the state news agency.

Outside Cairo, supporters and opponents of Mursi clashed in his home town of Zagazig in the Nile Delta, state TV reported.

Egypt plunged into renewed turmoil after Mursi issued his November 22 decree and an Islamist-dominated assembly hastily approved a new constitution to go to a referendum on December 15.

Since then six of the president's advisers have resigned. Essam al-Amir, the director of state television, quit on Thursday, as did a Christian official working at the presidency.

The Supreme Guide of the Brotherhood, to which Mursi belonged before he was narrowly elected president in June, appealed for unity. Divisions among Egyptians "only serve the nation's enemies", Mohamed Badie said in a statement.

Rival factions used rocks, petrol bombs and guns in the clashes around the presidential palace.

"GRIP ON THE COUNTRY"

"We came here to support President Mursi and his decisions. He is the elected president of Egypt," said demonstrator Emad Abou Salem, 40. "He has legitimacy and nobody else does."

Opposition protester Ehab Nasser el-Din, 21, his head bandaged after being hit by a rock the day before, decried the Muslim Brotherhood's "grip on the country", which he said would only tighten if the new constitution is passed.

Mursi's opponents accuse him of seeking to create a new "dictatorship". The president says his actions were necessary to prevent courts still full of judges appointed by Mubarak from derailing a constitution vital for Egypt's political transition.

U.N. Human Rights Commissioner Navi Pillay urged the Egyptian authorities to protect peaceful protesters and prosecute anyone inciting violence, including politicians.

"The current government came to power on the back of similar protests and so should be particularly sensitive to the need to protect protesters' rights to freedom of expression and peaceful assembly," Pillay said in Geneva.

The Islamists, who have dominated presidential and parliamentary elections since Mubarak was overthrown, are confident they can win the referendum and the parliamentary election to follow.

Mahmoud Hussein, the Brotherhood's secretary-general, said holding the plebiscite was the only way out of the crisis, dismissing the opposition as "remnants of the (Mubarak) regime, thugs and people working for foreign agendas".

As well as relying on his Brotherhood power base, Mursi may also tap into a popular yearning for stability and economic revival after almost two years of political turmoil.

Egypt's pound hit an eight-year low on Thursday, after previously firming on hopes that a $4.8 billion IMF loan would stabilise the economy. The stock market fell 4.6 percent.

Foreign exchange reserves fell by nearly $450 million to $15 billion in November, indicating that the Central Bank was still spending heavily to bolster the pound. The reserves stood at about $36 billion before the anti-Mubarak uprising.

(Additional reporting by Tom Perry, Edmund Blair and Marwa Awad; Writing by Alistair Lyon; Editing by Peter Graff)

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Ferry to Tanjong Pinang stranded after hitting corals

SINGAPORE: A ferry travelling from Singapore to the Indonesia island of Tanjong Pinang was stranded after hitting corals on Wednesday evening.

Indonesian online media Batam Today reported the incident happened near Lobam island, in the Bintan region at about 6.50pm local time.

No casualties were reported. However, one passenger suffered head injuries and was sent to a nearby hospital. The remaining 97 passengers were evacuated to a port at Tanjung Uban via several Indonesian boats.

Local media reported that 13 of the passengers are Singaporean, with the rest being Indonesians.

The ferry, MV Sindo 31, left Singapore's Tanah Merah Terminal at 6.30pm Singapore time. After travelling more than an hour, the ferry suddenly stalled when it hit corals. At the time of reporting, the ferry was still stranded at that location.

-CNA/ac

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Pranab escapes facing poll trial, SC bench knocks out Sangma plea 3:2

NEW DELHI: President Pranab Mukherjee on Wednesday escaped an election trial in the Supreme Court as a five-judge Constitution bench dismissed by a 3:2 majority a petition by Purno Sangma seeking quashing of Mukherjee's election to the top constitutional post.

While challenging Mukherjee's election on the ground that he was disqualified to contest as he had not resigned from two posts of offices of profit prior to filing of nomination, Sangma had pleaded with the bench of Chief Justice Altamas Kabir and Justices P Sathasivam, S S Nijjar, J Chelameswar and Ranjan Gogoi for a detailed trial on his election petition and decide his objections after a thorough scrutiny.

But the bench decided that Sangma's petition did not disclose such documents and plead issues that required entertaining the plea beyond the preliminary scrutiny stage for a full-fledged trial which could have involved Mukherjee's possible cross-examination by Sangma's lawyer.

CJI Kabir and Justices Sathasivam and Nijjar formed the majority to say, "We are not convinced that in the facts and circumstances of the case, the petition deserves a full and regular hearing as contemplated under Rule 20 of Order XXXIX of the Supreme Court Rules, 1966." Justices Chelameswar and Gogoi, in separate judgments, dissented with the majority view and said the facts and documents annexed by Sangma with his petition challenging Mukherjee's election warranted a detailed hearing.

Justice Chelameswar did not agree with the majority view but said he would soon furnish reasons for his dissent. Justice Gogoi said that Mukherjee needed to prove during the detailed hearing that he did not hold any office of profit at the time of filing of nomination.

"No conclusion that a regular hearing in the present case will be a redundant exercise or an empty formality can be reached so as to dispense with the same and terminate the petition at the stage of its preliminary hearing under Order XXXIX Rule 13. The election petition, therefore, deserves a regular hearing," Justice Gogoi said in his dissenting judgment.

Senior advocate P H Parekh, who has represented the last four presidents, including Mukherjee, as counsel in SC, said V V Giri was the last president to face cross-examination in an election petition. "He was made to sit on the dais away from the judges when he answered questions from the petitioner's counsel," Parekh recalled.

After that, Rule 13 of the Supreme Court Rules was amended so as to provide for preliminary scrutiny of election petitions against the president so as to weed out frivolous pleas at an early stage without embarrassing the country's first citizen by calling him to answer questions during cross-examination.

The majority judgment, authored by the CJI for himself and Justices Sathasivam and Nijjar, was emphatic in rejecting Sangma's counsel Ram Jethmalani's plea for a detailed hearing on the petition, which alleged that Mukherjee incurred disqualification for filing nomination without resigning as leader of Congress in Lok Sabha and chairman of Indian Statistical Institute, Kolkata.

"In the instant case, the office of chairman of the institute did not provide for any of the amenities indicated hereinabove and, in fact, the said office was also not capable of yielding profit or pecuniary gain," Justice Kabir said. "In regard to the office of the leader of the House, it is quite clear that the respondent had tendered his resignation from membership of the House before he filed his nomination papers for the presidential election," the majority judgment said.

It said the controversy that Mukherjee had resigned from membership of the Congress party and its Central Working Committee allegedly on June 25, 2012 was set at rest by the affidavit filed by the president's private secretary Pradeep Gupta.

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Longer tamoxifen use cuts breast cancer deaths

Breast cancer patients taking the drug tamoxifen can cut their chances of having the disease come back or kill them if they stay on the pills for 10 years instead of five years as doctors recommend now, a major study finds.

The results could change treatment, especially for younger women. The findings are a surprise because earlier research suggested that taking the hormone-blocking drug for longer than five years didn't help and might even be harmful.

In the new study, researchers found that women who took tamoxifen for 10 years lowered their risk of a recurrence by 25 percent and of dying of breast cancer by 29 percent compared to those who took the pills for just five years.

In absolute terms, continuing on tamoxifen kept three additional women out of every 100 from dying of breast cancer within five to 14 years from when their disease was diagnosed. When added to the benefit from the first five years of use, a decade of tamoxifen can cut breast cancer mortality in half during the second decade after diagnosis, researchers estimate.

Some women balk at taking a preventive drug for so long, but for those at high risk of a recurrence, "this will be a convincer that they should continue," said Dr. Peter Ravdin, director of the breast cancer program at the UT Health Science Center in San Antonio.

He reviewed results of the study, which was being presented Wednesday at a breast cancer conference in San Antonio and published by the British medical journal Lancet.

"The result of this trial will have a major, immediate impact on premenopausal women," Ravdin said.

About 50,000 of the roughly 230,000 new cases of breast cancer in the United States each year occur in women before menopause. Most breast cancers are fueled by estrogen, and hormone blockers are known to cut the risk of recurrence in such cases.

Tamoxifen long was the top choice, but newer drugs called aromatase inhibitors — sold as Arimidex, Femara, Aromasin and in generic form — do the job with less risk of causing uterine cancer and other problems.

But the newer drugs don't work well before menopause. Even some women past menopause choose tamoxifen over the newer drugs, which cost more and have different side effects such as joint pain, bone loss and sexual problems.

The new study aimed to see whether over a very long time, longer treatment with tamoxifen could help.

Dr. Christina Davies of the University of Oxford in England and other researchers assigned 6,846 women who already had taken tamoxifen for five years to either stay on it or take dummy pills for another five years.

Researchers saw little difference in the groups five to nine years after diagnosis. But beyond that time, 15 percent of women who had stopped taking tamoxifen after five years had died of breast cancer versus 12 percent of those who took it for 10 years. Cancer had returned in 25 percent of women on the shorter treatment versus 21 percent of those treated longer.

Tamoxifen had some troubling side effects: Longer use nearly doubled the risk of endometrial cancer. But it rarely proved fatal, and there was no increased risk among premenopausal women in the study — the very group tamoxifen helps most.

"Overall the benefits of extended tamoxifen seemed to outweigh the risks substantially," Dr. Trevor Powles of the Cancer Centre London wrote in an editorial published with the study.

The study was sponsored by cancer research organizations in Britain and Europe, the United States Army, and AstraZeneca PLC, which makes Nolvadex, a brand of tamoxifen, which also is sold as a generic for 10 to 50 cents a day. Brand-name versions of the newer hormone blockers, aromatase inhibitors, are $300 or more per month, but generics are available for much less.

The results pose a quandary for breast cancer patients past menopause and those who become menopausal because of their treatment — the vast majority of cases. Previous studies found that starting on one of the newer hormone blockers led to fewer relapses than initial treatment with tamoxifen did.

Another study found that switching to one of the new drugs after five years of tamoxifen cut the risk of breast cancer recurrence nearly in half — more than what was seen in the new study of 10 years of tamoxifen.

"For postmenopausal women, the data still remain much stronger at this point for a switch to an aromatase inhibitor," said that study's leader, Dr. Paul Goss of Massachusetts General Hospital. He has been a paid speaker for a company that makes one of those drugs.

Women in his study have not been followed long enough to see whether switching cuts deaths from breast cancer, as 10 years of tamoxifen did. Results are expected in about a year.

The cancer conference is sponsored by the American Association for Cancer Research, Baylor College of Medicine and the UT Health Science Center.

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Marilynn Marchione can be followed at http://twitter.com/MMarchioneAP

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NYC Subway Pusher Charged With Murder

A New York City man was charged today with murder for shoving another man onto subway tracks where he was struck and killed by an oncoming train.

Naeem Davis, 30, was charged after being questioned by police since Tuesday about the death of Ki-Suck Han, 58, of Queens, N.Y.

The charges include murder second degree: intentional, as well as murder second degree: depraved indifference.

He is charged with murdering Han "with depraved indifference" not because he intended to kill Han, but because his lack of regard for Han's life resulted in the death. Two sources involved in Davis' arrest and charging say there is a question whether he intended to kill Han or whether his death was an unintended consequence of an altercation.

NYC Man Pushed on Subway Tracks, Killed by Train Watch Video

Davis admitted to police while explaining the incident that he shoved Han in a way that caused him to fall onto the subway tracks, according to multiple sources involved with the investigation.

Han struggled to pull himself up from the shoulder-high track bed and back onto the platform at the 49th Street and Seventh Avenue station around 12:30 p.m. on Monday, but was hit and killed by a Q train when it barrelled into the station.

Davis could be heard arguing with Han before the fatal shove, according to surveillance video from the station. Davis told police that Han was harassing him and would not leave him alone, so he pushed Han.

Detectives are investigating whether the altercation began at the subway station turnstile and whether Han had jumped that turnstile and bumped Davis.

Police are also awaiting toxicology results on Han, who was found with an empty pint bottle of vodka on him when he died, according to sources.

Davis has no currently known mental illness history. He has prior arrests for minor charges, although the search of his arrest record is not complete. Those arrests in New York City appear to be peddler related.

He is expected to be arraigned this evening in New York.

Han death shocked New York City and the moment was frozen in the city's psyche by a photograph that captured Han with his arms and head above the platform staring at the oncoming train.

A doctor who was standing nearby attempted to perform CPR on Han, but he was pronounced dead at Roosevelt Hospital shortly after the accident.

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Clashes erupt in Egypt despite proposal to end crisis

CAIRO (Reuters) - Islamists fought protesters outside the Egyptian president's palace on Wednesday, while inside the building his deputy proposed a way to end a crisis over a draft constitution that has split the most populous Arab nation.

Stones and petrol bombs flew between opposition protesters and supporters of President Mohamed Mursi, and the Interior Ministry said 32 people had been arrested and three police vehicles destroyed.

Two Islamists were hit in the legs by what their friends said were bullets fired during clashes in streets around the compound in northern Cairo. One of them was bleeding heavily. And a leftist group said Islamists had cut off the ear of one of its members.

Medical sources said 33 people had been wounded, but despite reports of fatalities, the Health Ministry said there had been no deaths.

Riot police were deployed between the two sides in Cairo to try to stop confrontations that flared after dark despite an attempt by Vice President Mahmoud Mekky to ease the crisis.

Mekky said amendments to disputed articles in the draft constitution could be agreed with the opposition. A written agreement could then be submitted to the next parliament, to be elected after a referendum on the constitution on December 15.

"There must be consensus," he told a news conference, saying opposition demands had to be respected to reach a solution.

Prime Minister Hisham Kandil called for calm to "give the opportunity" for efforts underway to start a national dialogue.

Facing the gravest crisis of his six-month-old tenure, Mursi has shown no sign of buckling to the protests, confident that Islamists can win the referendum and a parliamentary election to follow.

Many Egyptians yearn for an end to political upheaval that began with the overthrow of Hosni Mubarak in February 2011 and which has hurt the economy as investors and tourists have fled.

Protests spread to other cities, and offices of the Brotherhood's political party in Ismailia and Suez were torched.

Egypt's opposition coalition blamed Mursi for the violence and said it was ready for dialogue if the Islamist leader scrapped a decree he issued on November 22 that gave him wide powers and shielded his decisions from judicial review.

DIALOGUE

"We hold President Mursi and his government completely responsible for the violence happening in Egypt today," opposition coordinator Mohamed ElBaradei told a news conference.

"We are ready for dialogue if the constitutional decree is cancelled ... and the referendum on this constitution is postponed," he said of the document written by an Islamist-led assembly that the opposition says ignores its concerns.

But liberals, leftists, Christians, ex-Mubarak followers and others opposed to Mursi have yet to generate a mass movement or a grassroots base to challenge the Brotherhood, which has come out on top in two elections since Mubarak's overthrow.

"Today what is happening in the Egyptian street, polarisation and division, is something that could and is actually drawing us to violence and could draw us to something worse," said ElBaradei, the former head of the U.N. nuclear watchdog.

Opposition leaders have previously urged Mursi to retract the November 22 decree, defer the referendum and agree to revise the constitution, but have not echoed calls from street protesters for his overthrow and the "downfall of the regime".

Mursi has said his decree was needed to prevent courts still full of judges appointed by ousted strongman Hosni Mubarak from derailing a constitution vital for Egypt's political transition.

Earlier on Wednesday Islamist supporters of Mursi tore down tents erected outside the presidential palace by leftist foes who had begun a sit-in there.

"They hit us and destroyed our tents. Are you happy, Mursi? Aren't we Egyptians too?" asked protester Haitham Ahmed.

Mohamed Mohy, a pro-Mursi demonstrator who was filming the scene, said: "We are here to support our president and his decisions and save our country from traitors and agents."

Mekky said street mobilisation by both sides posed a "real danger" to Egypt. "If we do not put a stop to this phenomenon right away ... where are we headed? We must calm down."

CALLS FOR RESTRAINT

U.S. Secretary of State Hillary Clinton weighed into Egypt's political debate, saying dialogue was urgently needed on the new constitution, which should "respect the rights of all citizens".

Clinton and Mursi worked together last month to broker a truce between Israel and Hamas Islamists in the Gaza Strip.

Washington is worried about rising Islamist power in Egypt, a staunch U.S. security partner under Mubarak, who preserved the U.S.-brokered peace treaty Cairo signed with Israel in 1979.

British Foreign Secretary William Hague called for restraint on all sides. He said Egypt's authorities had to make progress on the transition in an "inclusive manner" and urged dialogue.

The Muslim Brotherhood had summoned supporters to an open-ended demonstration at the presidential palace, a day after about 10,000 opposition protesters had encircled it for what organizers dubbed a "last warning" to Mursi.

State institutions, with the partial exception of the judiciary, have mostly fallen in behind Mursi.

The army, the muscle behind all previous Egyptian presidents in the republic's six-decade history, has gone back to barracks, having apparently lost its appetite to intervene in politics.

In August Mursi sacked Mubarak-era army commander and defense minister Mohamed Hussein Tantawi and removed the sweeping powers that the military council, which took over after Mubarak fell, had grabbed two months earlier.

Investors have seized on hopes that Egypt's turbulent transition, which has buffeted the economy for two years, may soon head for calmer waters, sending stocks 1.6 percent higher after a 3.5 percent rally on Tuesday.

Egypt has turned to the IMF for a $4.8 billion loan after the depletion of its foreign currency reserves. The government said on Wednesday the process was on track and its request would go to the IMF board as expected.

The board is due to review the facility on December 19.

Elijah Zarwan, a fellow with the European Council on Foreign Relations, said that if Egypt was to find a compromise solution to its crisis, it would not be through slogans and blows.

"It will be through quiet negotiation, not through dueling press conferences, street brawls, or civil strife," he said.

(Additional reporting by Tom Perry and Tamim Elyan; Writing by Alistair Lyon and Edmund Blair; Editing by Andrew Roche and Will Waterman)

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