Perhaps more ominously, the Egyptian army has warned all demonstrators to clear the streets.

Reuters:

Egypt's Republican Guard restored order around the presidential palace on Thursday after fierce overnight clashes killed seven people, but passions ran high in a struggle over the country's future.

The Islamist president, Mohamed Mursi, criticized by his opponents for his silence in the last few days, was due to address the nation later in the day, state television said.

Hundreds of his supporters who had camped out near the palace overnight withdrew before a mid-afternoon deadline set by the Republican Guard. Dozens of Mursi's foes remained, but were kept away by a barbed wire barricade guarded by tanks.

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.

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

Officials said seven people had been 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-year autocracy.

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.

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.

Hussein Abdel Ghani, spokesman of the opposition National Salvation Front, said more protests were planned, but not necessarily at the palace in Cairo's Heliopolis district.

"Our youth are leading us today and we decided to agree to whatever they want to do," he told Reuters.

Meanwhile, 4 more Morsi aides have resigned over his decree and the most prominent Sunni organization in Egypt, Al-Azhar, has called on Morsi to suspend his decree and talk to the opposition.

This isn't likely to happen. Morsi is prepared to ram the new constitution through in a referendum next week which will take the country a long way toward the imposition of sharia law. The president may indeed give up his powers that give him immunity from the rulings of the judiciary, but the fact is, he can re-issue that decree anytime and claim dictatorial powers for himself for as long as he wants to.

We can expect that anytime the legislature becomes too unruly or the judges do something he doesn't like, that Morsi will once again place himself above the law and govern virtually by decree. That is the real significance of Morsi-s power grab and it hasn't been lost on the hundreds of thousands of protestors demonstrating against him.