* Opposition plans mass protests, march on presidential palace
* Egypt stocks rise after judges clear way for constitution vote
* Prime minister says “majority consensus” favours referendum
* Big stakes in future of biggest Arab country and U.S. ally
By Alistair Lyon and Yasmine Saleh
CAIRO, Dec 3 (Reuters) - Egypt’s opposition called for mass protests on Tuesday against the Islamist-led government’s drive to hold a snap referendum on a new constitution after sweeping aside judicial obstacles.
President Mohamed Mursi ignited a storm of protest when he temporarily assumed extraordinary powers on Nov. 22 to prevent a judiciary still dominated by appointees of ousted predecessor Hosni Mubarak from derailing a troubled political transition.
Riot police mustered around the presidential palace after activists said they would march towards it later in the day in a “last warning” to Mursi, an Islamist narrowly elected by popular vote in June.
A few hundred protesters gathered near his house in a suburb west of Cairo, chanting slogans against his decree and against the Muslim Brotherhood. Police closed the road to stop them from coming any closer, a security official said.
Liberals, leftists, Christians and others have accused Mursi of staging a dictatorial power grab to steamroller through a constitution drafted by an assembly packed with Islamists.
Egypt’s most widely read independent newspapers did not publish on Tuesday in protest at Mursi’s “dictatorship”. Banks planned to close three hours early, one bank official said.
However, so far there has been only a limited response to opposition calls for a campaign of civil disobedience in the Arab world’s most populous country and cultural hub.
“The presidency believes the opposition is too weak and toothless. Today is the day we show them the opposition is a force to be reckoned with,” said Abdelrahman Mansour in Cairo’s Tahrir Square, the cradle of the anti-Mubarak revolt.
“Mursi must come out to talk and hear the people, the opposition,” the activist said. “The opposition says ‘no’ to the constitution and ‘no’ to autocracy.”
The Islamists, who have already pushed the army out of the political driving seat, sense their moment has come to shape the future of Egypt, a longtime U.S. ally whose peace treaty with Israel is a cornerstone of Washington’s Middle East policy.
The Muslim Brotherhood and its allies, who staged a huge pro-Mursi demonstration on Saturday, are confident that enough members of the judiciary will be available to oversee the Dec. 15 referendum, despite calls by some judges for a boycott.
Cairo stocks gained nearly 3 percent in early trading as investors took heart at what they saw as prospects for a return to stability in a country whose divisions have only widened since a mass uprising toppled Mubarak on Feb. 11, 2011.
Mohamed Radwan, at Pharos Securities brokerage, said the Supreme Judicial Council’s agreement to supervise the referendum had generated confidence that the vote would happen “despite all the noise and demonstrations that might take place until then”.
“NO WAY PERFECT”
Prime Minister Hisham Kandil, a technocrat with Islamist sympathies, said in an interview with CNN: “We certainly hope that things will quiet down after the referendum is completed.”
He said the constitution was “in no way a perfect text” that everyone had agreed to, but that a “majority consensus” favoured moving forward with the referendum in 11 days’ time.
The Muslim Brotherhood, now tasting power via the ballot box for the first time in eight decades of struggle, wants to protect its gains and appears ready to override street protests by what it sees as an unrepresentative minority.
It is also determined to stop the courts, which have already dissolved the Islamist-led elected lower house of parliament, from throwing more obstacles into their blueprint for change.
Mohamed ElBaradei, the coordinator of an opposition National Salvation Front, has said Mursi must rescind his decree, drop plans for the referendum and agree on a new, more representative constituent assembly to draft a democratic constitution.
In an opinion piece published in the Financial Times, he accused Mursi and the Brotherhood of believing that “with a few strokes of a pen, they can slide (Egypt) back into a coma”.
ElBaradei, former head of the U.N. nuclear watchdog, wrote: “If they continue to try, they risk an eruption into violence and chaos that will destroy the fabric of Egyptian society.”
Despite charges that they are anti-Islamist and politically motivated, judges say they are following legal codes in their rulings. Experts say some political changes rushed through in the past two years have been on shaky legal ground.
A Western diplomat said the Islamists were counting on a popular yearning for restored normality and economic stability.
“All the messages from the Muslim Brotherhood are that a vote for the constitution is one for stability and a vote against is one for uncertainty,” he said, adding that the cost of the strategy was a “breakdown in consensus politics”.