* Protesters break through barbed wire barricades
* Deputy says president could delay constitution vote
* Opposition demand end to Mursi's expanded powers
* Brotherhood says opposition out to topple elected leader
By Edmund Blair and Yasmine Saleh
CAIRO, Dec 7 Tens of thousands of Egyptian
protesters surged around the presidential palace on Friday and
the opposition rejected President Mohamed Mursi's call for
dialogue to end a crisis that has polarised the nation and
sparked deadly clashes.
The Islamist leader's deputy said he could delay a Dec. 15
referendum on a constitution that liberals opposed, although the
concession only partly meets a list of opposition demands that
include scrapping a decree that expanded Mursi's powers.
"The people want the downfall of the regime" and "Leave,
leave," crowds chanted after bursting through barbed wire
barricades and climbing on tanks guarding the palace of Egypt's
first freely elected president.
Their slogans echoed those used in a popular revolt that
toppled Mursi's predecessor Hosni Mubarak in February 2011.
Vice President Mahmoud Mekky said in a statement sent to
local media that the president was prepared to postpone the
referendum if that could be done without legal challenge.
The dialogue meeting was expected to go ahead on Saturday in
the absence of most opposition factions. "Tomorrow everything
will be on the table," a presidential source said of the talks.
The opposition has demanded that Mursi rescind a Nov. 22
decree giving himself wide powers and delay the vote set for
Dec. 15 on a constitution drafted by an Islamist-led assembly
which they say fails to meet the aspirations of all Egyptians.
The state news agency reported that the election committee
had postponed the start of voting for Egyptians abroad until
Wednesday, instead of Saturday as planned. It did not say
whether this would affect the timing of voting in Egypt.
Ahmed Said, leader of the liberal Free Egyptians Party, told
Reuters that delaying expatriate voting was made to seem like a
concession but would not change the opposition's stance.
He said the core opposition demand was to freeze Mursi's
decree and "to reconsider the formation and structure of the
constituent assembly", not simply to postpone the referendum.
The opposition organised marches converging on the palace
which elite Republican Guard units had ringed with tanks and
barbed wire on Thursday after violence between supporters and
opponents of Mursi killed seven people and wounded 350.
Islamists, who had obeyed a military order for demonstrators
to leave the palace environs, held funerals on Friday at Cairo's
al-Azhar mosque for six Mursi partisans who were among the dead.
"With our blood and souls, we sacrifice to Islam," they chanted.
In a speech late on Thursday, Mursi had refused to retract
his Nov. 22 decree or cancel the referendum on the constitution,
but offered talks on the way forward after the referendum.
The National Salvation Front, the main opposition coalition,
said it would not join the dialogue. The Front's coordinator,
Mohamed ElBaradei, a Nobel peace laureate, dismissed the offer
as "arm-twisting and imposition of a fait accompli".
Murad Ali, spokesman of the Brotherhood's Freedom and
Justice Party (FJP), said opposition reactions were sad: "What
exit to this crisis do they have other than dialogue?" he asked.
Mursi's decree giving himself extra powers sparked the worst
political crisis since he took office in June and set off
renewed unrest that is dimming Egypt's hopes of stability and
economic recovery after nearly two years of turmoil following
the overthrow of Mubarak, a military-backed strongman.
The turmoil has exposed contrasting visions for Egypt, one
held by Islamists, who were suppressed for decades by the army,
and another by their rivals, who fear religious conservatives
want to squeeze out other voices and restrict social freedoms.
Caught in the middle are many of Egypt's 83 million people
who are desperate for an end to political turbulence threatening
their precarious livelihoods in an economy under severe strain.
"We are so tired, by God," said Mohamed Ali, a labourer. "I
did not vote for Mursi nor anyone else. I only care about
bringing food to my family, but I haven't had work for a week."
A long political standoff will make it harder for Mursi's
government to tackle the crushing budget deficit and stave off a
balance of payments crisis. Austerity measures, especially cuts
in costly fuel subsidies, seem inevitable to meet the terms of a
$4.8-billion IMF loan that Egypt hopes to clinch this month.
U.S. President Barack Obama told Mursi on Thursday of his
"deep concern" about casualties in this week's clashes and said
"dialogue should occur without preconditions".
The upheaval in the most populous Arab nation worries the
United States, which has given billions of dollars in military
and other aid since Egypt made peace with Israel in 1979.
The conflict between Islamists and opponents who each
believe the other is twisting the democratic rules to thwart
them has poisoned the political atmosphere in Egypt.
The Muslim Brotherhood's spokesman, Mahmoud Ghozlan, told
Reuters that if the opposition shunned the dialogue "it shows
that their intention is to remove Mursi from the presidency and
not to cancel the decree or the constitution as they claim".
Ayman Mohamed, 29, a protester at the palace, said Mursi
should scrap the draft constitution and heed popular demands.
"He is the president of the republic. He can't just work for
the Muslim Brotherhood," Mohamed said of the eight-decade-old
Islamist movement that propelled Mursi from obscurity to power.