Indian minister in strong attack on microfinance

NEW DELHI: Microfinance is a "discredited model" and to believe that poverty alleviation in India is possible through such methods is "c**p", Rural Development Minister Jairam Ramesh said Wednesday.

"Nothing can stop an idea whose time has gone," Ramesh told a microfinance conference in New Delhi, according to the Press Trust of India.

"It is a discredited model," he said, referring to the system in which small loans are made to people who do not have access to the mainstream banking system.

Ramesh, known for being outspoken, conceded that "there are many advantages when it comes to delivery of finance through the microfinance route".

"But one should be somehow more modest in the expectation of microfinance and microfinance institutions," he went on.

"To think that we are going alleviate poverty is a tall, tall claim. Poverty alleviation through microfinance -- it is c**p."

The multi-billion-dollar industry in India, once seen as a saviour of the poor, has been in crisis since a backlash against alleged abusive practices by debt collectors and extremely high interest rates for loans.

The sector has also under been fire in neighbouring Bangladesh where the micro-lending model was pioneered, with Prime Minister Sheikh Hasina accusing the industry of "sucking blood from the poor" due to high lending rates.

-AFP/ac

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Two Zee editors arrested for 'Rs 100-crore extortion bid'

NEW DELHI: The crime branch of Delhi Police on Tuesday arrested two editors of Zee group on charges of extortion based on a complaint filed by Congress MP Naveen Jindal. They are Sudhir Chaudhary, business head and editor of Zee News and Sameer Ahluwalia, head of Zee business, a senior police officer said.

S B S Tyagi, DCP (Crime Branch), said: "Prima facie evidence of criminal conspiracy and extortion has been found against the two leading to their arrest." The Zee editors had earlier denied charges levelled against them.

The police said the arrests came after forensic experts submitted a report stating the CD containing the audio and video recording of the conversation between Zee editors and Jindal's officials was "not doctored". The inter-state cell of crime branch has found other conclusive evidence against the duo, it is claimed.

"The two editors were called for questioning on Tuesday during which they could not give satisfactory answers to our questions. They were informed around 8.30pm about their arrests after four hours of questioning. They will be produced in Saket court at 2pm on Wednesday," a senior police officer said.

Earlier, Jindal Steel and Power Ltd (JSPL) had provided the police with audio recordings of telephonic conversation and video recording of three meetings held on September 13, 17 and 19 between Zee and JSPL officials at Hyatt Regency hotel in Delhi.

In their FIR, Naveen Jindal's company JSPL had also named Essel Group chairman Subhash Chandra and his son Punit Goenka as co-accused, alleging criminal conspiracy, extortion, criminal intimidation and defamation by Zee News and its officials, police said.

In mid-October, the Broadcast Editors' Association (BEA) had removed Sudhir Chaudhary from the post of treasurer and primary membership of the body.

The crime branch of Delhi Police had registered an FIR against the two office bearers and others for allegedly trying to extort Rs 100 crore from the Naveen Jindal. The FIR was lodged under sections of extortion after the HR head of Jindal's company gave a written complaint to the police against the duo and others levelling allegations of extortion in form of advertisements to drop certain stories regarding the coal mine allocations.

The complainant had alleged that the duo reportedly met officials of Jindal group and told them that reports against them could be dropped if the amount was paid.

As per the complainant, several phone calls were exchanged. The complainant alleged that when they declined to pay up the money, the channel ran a series of malicious news items targeting them.

Reacting to the move, Sudhir Chauhary had earlier told TOI that the allegations were baseless, false and fabricated. "Jindals were the biggest beneficiaries in the coal block allocation scam and we had exposed them. If they are targeting us, they are targeting investigative journalism. It's an attempt to malign us and seems a result of their frustration after being exposed," he had said.

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CDC: HIV spread high in young gay males

NEW YORK (AP) — Health officials say 1 in 5 new HIV infections occur in a tiny segment of the population — young men who are gay or bisexual.

The government on Tuesday released new numbers that spotlight how the spread of the AIDS virus is heavily concentrated in young males who have sex with other males. Only about a quarter of new infections in the 13-to-24 age group are from injecting drugs or heterosexual sex.

The Centers for Disease Control and Prevention said blacks represented more than half of new infections in youths. The estimates are based on 2010 figures.

Overall, new U.S. HIV infections have held steady at around 50,000 annually. About 12,000 are in teens and young adults, and most youth with HIV haven't been tested.

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Online:

CDC report: http://www.cdc.gov/vitalsigns

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GOP Senators More Troubled After Rice Meeting

United Nations Ambassador Susan Rice's attempts to make nice with a trio of Republican senators who have criticized her response to the Sept. 11 terror attack on the U.S. consulate in Benghazi, Libya, seem to have backfired.

The senators said they left their face-to-face meeting with Rice this morning "more concerned" and "significantly troubled."

The three Republicans, Sens. John McCain of Arizona, Lindsey Graham of South Carolina and Kelly Ayotte of New Hampshire, said not only did Rice, who was joined by Acting CIA Director Mike Morell, not answer all their questions about the attack but did little to assuage their overall worries.

"We are significantly troubled by many of the answers that we got, and some that we didn't get concerning evidence that was overwhelming leading up to the attack on the consulate," McCain said.

"The concerns I have are greater today than before, and we're not even close to getting the basic answers," Graham said.

Today's meeting was seen as part of Rice's Capitol Hill "charm offensive," as her possible nomination to become the next secretary of state has met with some vocal opposition – especially from McCain, Graham and Ayotte, who still seemed to steer clear of questions about whether they would stand in the way if Rice was nominated.

"Before anybody can make an intelligent decision about promoting someone involved in Benghazi, we need to do a lot more," Graham said. "To this date, we don't have the FBI interviews of the survivors conducted one or two days after the attack. We don't have the basic information about what was said the night of the attack ... as of this date."

Sen. Lindsey Graham and Sen. Dick Durbin on 'This Week' Watch Video

Graham compared the situation to 2006, when Senate Democrats blocked the nomination of John Bolton, President Bush's choice for U.N. ambassador.

What the senators seemed to find most problematic was Rice's statement on the Sunday morning news shows days after the attack. At first, she said it was a "spontaneous" attack and not a terrorist attack.

Ayotte said that in today's meeting Rice called the information she first gave to the American people wrong.

"It's certainly clear from the beginning that we knew that those with ties to al Qaeda were involved in the attack on the embassy, and clearly the impression that was given, the information given to the American people, was wrong," Ayotte said,

Ayotte said that as the U.N. ambassador should have stepped up and said that she couldn't go on the Sunday morning news shows and talk about the attack if that was the case.

In her defense, Rice said in a statement following the meeting: "We explained that the talking points provided by the intelligence community, and the initial assessment upon which they were based, were incorrect in a key respect: There was no protest or demonstration in Benghazi. While, we certainly wish that we had had perfect information just days after the terrorist attack, as is often the case, the intelligence assessment has evolved. We stressed that neither I nor anyone else in the administration intended to mislead the American people at any stage in this process, and the administration updated Congress and the American people as our assessments evolved."

Graham, like Ayotte, said it would have been better not to give any information at all.

"If you can give nothing but bad information, isn't it better to give no information at all? It was unjustified to give the scenarios as presented by Ambassador Rice and President Obama three weeks before an election."

Rice is expected to meet with Sen. Joe Lieberman, I-Conn., later today. A close ally of McCain (Lieberman endorsed McCain for president in 2008), Lieberman has not been as quick to criticize Rice.

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Mursi opponents clash with police in Cairo

CAIRO (Reuters) - Opponents of President Mohamed Mursi clashed with Cairo police on Tuesday as thousands of protesters around the nation stepped up pressure on the Islamist leader to scrap a decree they say threatens Egypt with a new era of autocracy.

Police fired tear gas at stone-throwing youths in streets off the capital's Tahrir Square, heart of the uprising that toppled Hosni Mubarak last year. Protesters also turned out in Alexandria, Suez, Minya and cities in the Nile Delta.

A 52-year-old protester died after inhaling teargas in Cairo, the second death since last week's decree that expanded Mursi's powers and barred court challenges to his decisions.

Tuesday's protest called by leftists, liberals and other groups deepened the worst crisis since the Muslim Brotherhood politician was elected in June, and exposed a divide between the newly empowered Islamists and their opponents.

Mursi's administration has defended his decree as an effort to speed up reforms and complete a democratic transformation. Opponents say it shows he has dictatorial instincts.

"The people want to bring down the regime," protesters in Tahrir chanted, echoing slogans used in the anti-Mubarak revolt.

Mursi's move provoked a rebellion by judges and battered confidence in an economy struggling after two years of turmoil.

Opponents have accused Mursi of behaving like a modern-day pharaoh, a jibe long leveled at Mubarak. The United States, a benefactor to Egypt's military, has expressed concern about more turbulence in a country that has a peace treaty with Israel.

"We don't want a dictatorship again. The Mubarak regime was a dictatorship. We had a revolution to have justice and freedom," 32-year-old Ahmed Husseini said in Cairo.

Some protesters have been camped out since Friday in Tahrir, and violence has flared around the country, including in a town north of Cairo where a Muslim Brotherhood youth was killed in clashes on Sunday. Hundreds have been injured.

Supporters and opponents of Mursi threw stones at each other and some hurled petrol bombs in the Delta city of el-Mahalla el-Kubra. A doctor said nine people were brought to hospital, but he expected numbers to rise to dozens.

SHOW OF STRENGTH

The protest was a show of strength by the non-Islamist opposition, whose fractious ranks have been brought together by the crisis. Well-organized Islamists have consistently beaten more secular-minded parties at the ballot box in elections held since Mubarak was ousted in February, 2011.

"The main demand is to withdraw the constitutional declaration (decree). This is the point," said Amr Moussa, former Arab League chief and presidential candidate who has joined the opposition coalition, the National Salvation Front.

Some scholars from the prestigious al-Azhar mosque and university joined Tuesday's protest, showing that Mursi and his Brotherhood have alienated some more moderate Muslims. Members of Egypt's large Christian minority also joined in.

Mursi formally quit the Brotherhood on taking office, saying he would be a president for all Egyptians, but he is still a member of its Freedom and Justice Party.

The decree issued on Thursday expanded his powers and protected his decisions from judicial review until the election of a new parliament expected in the first half of 2013.

New York-based Human Rights Watch said it gives Mursi more power than the interim military junta from which he took over.

U.N. Secretary-General Ban Ki-moon told an Austrian paper he would encourage Mursi to resolve the issue by dialogue.

Trying to ease tensions with judges outraged at the step, Mursi has assured Egypt's highest judicial authority that elements of the decree giving his decisions immunity would apply only to matters of "sovereign" importance. Although that should limit it to issues such as a declaration of war, experts said there was room for much broader interpretation.

In another step to avoid more confrontation, the Muslim Brotherhood cancelled plans for a rival mass rally in Cairo on Tuesday to support the decree. Violence has flared in the past when both sides have taken to the streets.

But there has been no retreat on other elements of the decree, including a stipulation that the Islamist-dominated body writing a new constitution be protected from legal challenge.

LEGITIMACY UNDERMINED

"The decree must be cancelled and the constituent assembly should be reformed. All intellectuals have left it and now it is controlled by Islamists," said 50-year-old Noha Abol Fotouh.

With its popular legitimacy undermined by the withdrawal of most of its non-Islamist members, the assembly faces a series of court cases from plaintiffs who claim it was formed illegally.

Mursi issued the decree on November 22, a day after he won U.S. and international praise for brokering an end to eight days of violence between Israel and Hamas around the Gaza Strip.

Mursi's decree was seen as targeting in part a legal establishment still largely unreformed from Mubarak's era, when the Brotherhood was outlawed.

Though both Islamists and their opponents broadly agree that the judiciary needs reform, Mursi's rivals oppose his methods.

Rulings from an array of courts this year have dealt a series of blows to the Brotherhood, leading to the dissolution of the first constitutional assembly and the lower house of parliament elected a year ago. The Brotherhood dominated both.

The judiciary blocked an attempt by Mursi to reconvene the Brotherhood-led parliament after his election victory. It also stood in the way of his attempt to sack the prosecutor general, another Mubarak holdover, in October.

In his decree, Mursi gave himself the power to sack that prosecutor and appoint a new one. In open defiance of Mursi, some judges are refusing to acknowledge that step.

Mursi has repeatedly stated the decree will stay only until a new parliament is elected - something that can happen once the constitution is written and passed in a popular referendum.

(Additional reporting by Tom Perry, Seham Eloraby, Marwa Awad and Yasmine Saleh in Cairo and Michael Shields in Vienna; Writing by Edmund Blair and Tom Perry; Editing by Anna Willard, David Stamp and Alastair Macdonald)

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France to back Palestinian bid for enhanced UN status

PARIS: France on Tuesday said it will back a Palestinian bid for enhanced UN status at a General Assembly vote this week, a move hailed by the Palestinians as a "historic" step in their quest for greater global recognition.

Foreign Minister Laurent Fabius said Paris had a "consistent position" in support of recognising a Palestinian state and told the National Assembly that France, one of the five permanent members of the UN Security Council, would vote for "non-member observer state" status for the Palestinians.

France is the first European power to voice its approval of the Palestinian move to upgrade its current permanent observer status.

The proposal is set to sail through as it has the backing of the majority of the UN's 193 member states.

It will improve the chances of the Palestinians joining the International Criminal Court and UN agencies. The Palestinians want to launch legal action in The Hague-based court to challenge Israel's occupation of the West Bank.

"We will vote with coherence and clarity," Fabius said.

"You know that for years and years France's consistent position has been the recognition of the Palestinian state," he said, recalling that former French president Francois Mitterrand had staked out that stance in a 1982 speech to the Israeli parliament.

That line was unchanged even during the tenure of former right-wing president Nicolas Sarkozy when Palestine was admitted to UNESCO last year, he said, adding that recognition of Palestine was one of current President Francois Hollande's campaign planks.

"That is why when the question is raised on Thursday and Friday, France will respond with a 'yes'," he said.

The draft resolution seeking the status upgrade also calls on the UN Security Council to "consider favourably" the Palestinian request for full membership made one year ago.

The United States, Israel's staunch ally, had blocked that move at the 15-nation council.

The Palestinian envoy to the United Nations on Tuesday urged other powers to follow France's example, which he hailed as a landmark step.

"It is of a magnitude of a historic level and I am sure that many other European countries will follow the example of France and we thank them in advance for being on the side of history and the side of humanity," Palestinian envoy Riyad Mansour told reporters.

Israel had little to say on the development, with the foreign ministry merely saying that it was "no surprise".

"We knew that France was inclined to vote for this resolution, so we expected as much," spokesman Yigal Palmor told AFP in an email.

Britain, also a permanent member of the Security Council, has not yet decided whether it will vote for the resolution, said the country's UN ambassador, Mark Lyall Grant.

He told reporters that Britain believes the Palestinians should delay their application, but is still in talks with the Palestinian Authority and will decide "in due time" how to vote.

The Austrian foreign ministry also said Tuesday it would back the bid and claimed that more than half the European Union's 27 member states would vote for it.

Diplomats have predicted that between 11 and 15 EU countries could back the Palestinian proposal.

The new resolution will also call for a Middle East settlement that "fulfils the vision of two states, an independent, sovereign, democratic, contiguous and viable state of Palestine, living side-by-side in peace and security with Israel, on the basis of the pre-1967 borders."

It also highlights the "urgent need" for a resumption of peace talks, frozen in September 2010 when Israel refused a Palestinian demand to extend a moratorium on settlement building in the occupied territories.

The United States and Israel have opposed the UN application, insisting that only direct talks on a peace accord can produce an agreement that will create a Palestinian state.

Fabius on Tuesday also highlighted what he called the "extremely fragile" nature of last week's ceasefire between Israel and Hamas in the Gaza Strip.

"It's only through immediate and unconditional negotiations between the two sides, which we are seeking, that one can fulfil the creation of a Palestinian state," he said.

The Palestinian territories are already gripped by their worst economic crisis in decades but the Palestinians say they are going to the UN General Assembly out of frustration at the lack of progress in peace talks during Obama's first term.

AFP/ac

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UPA has the numbers, but keen to avoid vote on FDI

NEW DELHI: The UPA can easily clear the voting test on its decision to allow FDI in retail, but is keen to avoid a contest in order to escape criticism from the very same allies who will help it best the opposition.

The government's edge in the numbers game was evident at the all-party meeting called by parliamentary affairs minister Kamal Nath on Monday to discuss a resolution of the standoff in Parliament, with UPA partner DMK as well as outside supporters SP and BSP making it plain yet again that they won't ditch the government in any tussle with the opposition.

However, the government was not spoiling for a vote yet because of the recognition that the satisfaction of yet another triumph over the opposition may be undercut by a display of the sharp rift in the ruling coalition over a measure that the government has showcased as proof of its just-found resolve to rev up reforms.

The Monday meeting of political parties saw finance minister P Chidambaram appealing to the opposition to drop their demand for a vote on the ground that the perception of division over reforms would interfere with his objective to mobilize $70 billion through the triad of FDI, FII and ECB.

SP, BSP and DMK, which will help the government sail through the contest on FDI, have been critical of the decision. The all-party meeting saw DMK's T R Baalu regretting that "the issue could have been handled better".

Although they are certain not to side with the opposition in a vote on the desirability of letting in global supermarket chains, the three parties are likely to use aggressive rhetoric to counter the perception of dilution of their opposition: a situation that the government wants to dodge.

A meeting of UPA partners has been called on Tuesday to formulate a common stand on the tussle which ensured that the two Houses conducted no business on Monday either.

The BJP, the Left and allies stuck to their guns that discussion on FDI in multi-brand retail be followed by voting, a demand the government is loath to accept. They were supported by JD(U), Akali Dal, Shiv Sena, BJD, AIADMK and TDP.

Trinamool leader Sudip Bandopadhyaya's comment that the party was not really bothered about the rule under which the debate may happen led to some speculation that Mamata Banerjee, whose no-confidence motion failed to find support from either NDA or the Left, may retaliate by staying neutral.

However, TMC's chief whip in Rajya Sabha Derek O'Brien, one of the attendees, disputed the interpretation which had led to some celebration in Congress circles. "The speculation is laughable, considering that we left the government on the issue of FDI. Sudip merely wanted to say that Trinamool was focused on the government's ouster, and would not like to join the quibble over rules," he said.

The government and the opposition camps were neatly cleaved on the controversial issue but Congress managers appeared more comfortable than in the past after "outside supporters" SP and BSP told the all-party meeting that the chair of the respective Houses should decide the section under which the discussion is held.

Lalu Prasad's RJD stayed firmly with the government, saying the BJP should he hauled up for advocating 100% FDI during the Vajpayee government.

On the other side, leader of opposition in Lok Sabha Sushma Swaraj was insistent on a discussion under a voting clause. "There will be no compromise on (Rule) 184 (which entails voting)." Asked if BJP would not allow Parliament to function, she replied, "No compromise at all... When I said no compromise, it means something."

The uncompromising attitude of the main opposition party could threaten another session of Parliament and UPA managers are assessing if BJP could go all the way. The ruling party wants early resumption of proceedings to convey it is in charge.

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Bounce houses a party hit but kids' injuries soar

CHICAGO (AP) — They may be a big hit at kids' birthday parties, but inflatable bounce houses can be dangerous, with the number of injuries soaring in recent years, a nationwide study found.

Kids often crowd into bounce houses, and jumping up and down can send other children flying into the air, too.

The numbers suggest 30 U.S. children a day are treated in emergency rooms for broken bones, sprains, cuts and concussions from bounce house accidents. Most involve children falling inside or out of the inflated playthings, and many children get hurt when they collide with other bouncing kids.

The number of children aged 17 and younger who got emergency-room treatment for bounce house injuries has climbed along with the popularity of bounce houses — from fewer than 1,000 in 1995 to nearly 11,000 in 2010. That's a 15-fold increase, and a doubling just since 2008.

"I was surprised by the number, especially by the rapid increase in the number of injuries," said lead author Dr. Gary Smith, director of the Center for Injury Research and Policy at Nationwide Children's Hospital in Columbus, Ohio.

Amusement parks and fairs have bounce houses, and the playthings can also be rented or purchased for home use.

Smith and colleagues analyzed national surveillance data on ER treatment for nonfatal injuries linked with bounce houses, maintained by the U.S. Consumer Product Safety Commission. Their study was published online Monday in the journal Pediatrics.

Only about 3 percent of children were hospitalized, mostly for broken bones.

More than one-third of the injuries were in children aged 5 and younger. The safety commission recommends against letting children younger than 6 use full-size trampolines, and Smith said barring kids that young from even smaller, home-use bounce houses would make sense.

"There is no evidence that the size or location of an inflatable bouncer affects the injury risk," he said.

Other recommendations, often listed in manufacturers' instruction pamphlets, include not overloading bounce houses with too many kids and not allowing young children to bounce with much older, heavier kids or adults, said Laura Woodburn, a spokeswoman for the National Association of Amusement Ride Safety Officials.

The study didn't include deaths, but some accidents are fatal. Separate data from the product safety commission show four bounce house deaths from 2003 to 2007, all involving children striking their heads on a hard surface.

Several nonfatal accidents occurred last year when bounce houses collapsed or were lifted by high winds.

A group that issues voluntary industry standards says bounce houses should be supervised by trained operators and recommends that bouncers be prohibited from doing flips and purposefully colliding with others, the study authors noted.

Bounce house injuries are similar to those linked with trampolines, and the American Academy of Pediatrics has recommended against using trampolines at home. Policymakers should consider whether bounce houses warrant similar precautions, the authors said.

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Online:

Pediatrics: http://www.pediatrics.org

Trade group: http://www.naarso.com

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AP Medical Writer Lindsey Tanner can be reached at http://www.twitter.com/LindseyTanner

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Cracks in the Conservative Armor?

So much for pledges?

As lawmakers return to Washington today, the deadline to put on the brakes before the country plunges off the fiscal cliff is now in sight, and it appears that both sides are open to some wheeling and dealing.
For Republicans, that may mean breaking a promise many of them made not to raise taxes.

"When you're $16 trillion in debt, the only pledge we should be making to each other is to avoid becoming Greece," Sen. Lindsey Graham, R-S.C., told ABC's George Stephanopoulos yesterday in a "This Week" interview. "Republicans should put revenue on the table."

Infographic: What to Know About the "Fiscal Cliff"

But for Americans for Tax Reform president Grover Norquist, the spirit of the pledge seems as alive as ever even as GOP lawmakers like Graham publicly contemplate defecting.

"What the pledge does of course is allows elected officials to make it clear openly to their voters where they stand," Norquist said in an interview with ABC's David Kerley. "Are they going to be with reforming government or raising taxes to continue more of the same?"

Peter Foley/Bloomberg/Getty Images

Sen. Lindsey Graham and Sen. Dick Durbin on 'This Week' Watch Video

California Drunken Driving Case: Woman Drove With Dying Man on Car Watch Video

Norquist is casting the pledge as lawmakers' "commitment to their constituents" -- rather than to him -- and he told ABC News over the weekend that the hundreds who have signed it "are largely keeping it."

But other prominent Republicans are joining Graham, including Sen. Bob Corker, R-Tenn., Sen. Saxby Chambliss, R-Ga., and Rep. Peter King, R-N.Y., who signaled his openness to re-thinking the pledge yesterday on NBC's "Meet The Press."

"The world is changed and the economic situation is different," King said.

Watch: Nancy Pelosi on the status of the fiscal cliff

Of course, Graham on "This Week" and other GOP members of Congress who appeared on the Sunday talk shows qualified their support for raising revenue on not raising tax rates but rather on capping certain deductions.

And for all the talk of taxes, there's another elephant in the room that gets a lot less attention: Entitlement reform.

"I will violate the pledge -- long story short -- for the good of the country only if Democrats will do entitlement reform," Graham said.

Also appearing on "This Week," Sen. Dick Durbin, D-Ill., acknowledged that "meaningful reforms" for Medicare should be on the table.

"Only 12 years of solvency lie ahead if we do nothing," Durbin said. "So those who say don't touch it, don't change it are ignoring the obvious."

But how many other Democrats are going to be willing to see serious reform as part of the discussion?

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Egypt's Mursi holds crisis talks over power grab

CAIRO (Reuters) - Egyptian President Mohamed Mursi negotiated with senior judges on Monday to try to defuse a crisis over his seizure of new powers which set off violent protests reminiscent of an uprising last year that led to the rise of his Islamist movement.

The justice minister said he believed Mursi would agree with Egypt's highest judicial authority on its proposal to limit the scope of the new powers. Mursi's spokesman said the president was "very optimistic Egyptians would overcome the crisis".

But the protesters, some camped in Cairo's Tahrir Square, have said only retracting the decree will satisfy them, a sign of the deep rift between Islamists and their opponents that is destabilising Egypt two years after Hosni Mubarak was ousted.

"There is no use amending the decree," said Tarek Ahmed, 26, a protester who stayed the night in Tahrir, where tents covered the central traffic circle. "It must be scrapped."

One person has been killed and about 370 injured in clashes between police and protesters since Mursi issued the decree on Thursday shielding his decisions from judicial review, emboldened by international plaudits for brokering an end to eight days of violence between Israel and Hamas.

The stock market is down more than 7 percent.

Mursi's political 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'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.

"President Mursi is very optimistic that Egyptians will overcome this challenge as they have overcome other challenges," presidential spokesman Yasser Ali told reporters, shortly before the president started his meeting with members of Egypt's highest judicial authority, the Supreme Judicial Council.

COMPROMISE?

The council has hinted at a compromise, saying Mursi's decree should apply only to "sovereign matters". That suggests it did not reject the declaration outright. It urged judges and prosecutors, some of whom went on strike, to return to work.

Justice Minister Ahmed Mekky, speaking about the council statement, said: "I believe President Mohamed Mursi wants that."

The presidential spokesman said two Mursi aides had asked to resign over the crisis, but Mursi had yet to accept.

The protesters are worried that Mursi's Muslim Brotherhood aims to dominate the post-Mubarak era after winning the first democratic parliamentary and presidential elections this year.

A deal with a judiciary dominated by Mubarak-era judges, which Mursi has pledged to reform, may not placate them.

A group of lawyers and activists has also challenged Mursi's decree in an administrative court, which said it would hold its first hearing on December 4. Other decisions by Mursi have faced similar legal challenges brought to court by opponents.

Banners in Tahrir called for dissolving the assembly drawing up a constitution, an Islamist-dominated body Mursi made immune from legal challenge. Many liberals and others have walked out of the assembly saying their voices were not being heard.

Only once a constitution is written can a new parliamentary election be held. Until then, legislative and executive power remains in Mursi's hands, and Thursday's decree puts his decisions above judicial oversight.

One Muslim Brotherhood member was killed and 60 people were hurt on Sunday in an attack on the main office of the Brotherhood in the Egyptian Nile Delta town of Damanhour, the website of the Brotherhood's Freedom and Justice Party said.

The party's offices have also been attacked in other cities.

ASSURANCES

One politician said the scale of the crisis could push opponents towards a deal to avoid a further escalation. Mursi's opponents have called for a big demonstration on Tuesday.

"I am very cautiously optimistic because the consequences are quite, quite serious, the most serious they have been since the revolution," said Mona Makram Ebeid, former member of parliament and prominent figure in Egyptian politics.

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.

Talks with Mursi have been rejected by members of a National Salvation Front, a new opposition coalition that brings together liberal, leftist and other politicians and parties, who until Mursi's decree had been a fractious bunch struggling to unite.

"There is no room for dialogue when a dictator imposes the most oppressive, abhorrent measures and then says 'let us split the difference'," prominent opposition leader Mohamed ElBaradei said on Saturday. He has said he expected to act as the Front's coordinator.

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.

Egypt had hoped to stop the economic rot by signing an initial deal last week for a $4.8 billion loan from the International Monetary Fund. As well as tumbling share prices, yields at a Sunday treasury bill auction rose, putting even more pressure on the government that faces a crushing budget deficit.

"We are back to square one, politically, socially," said Mohamed Radwan of Pharos Securities, an Egyptian brokerage firm.

(Additional reporting by Tom Perry, Patrick Werr and Marwa Awad in Cairo; Editing by Philippa Fletcher and Giles Elgood)

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