Seven people were killed and more than 260 wounded when Islamist supporters of Mohamed Morsi fought opponents of the deposed Egyptian president and security forces, marking a return of violence that overshadowed the naming of an interim cabinet.
Egyptian authorities rounded up more than 400 people over the fighting which raged through the night into Tuesday, nearly two weeks after the army removed Morsi in response to mass demonstrations against him.
Interim Prime Minister Hazem el-Beblawi is forming a government to lead Egypt through a “road map” to restore full civilian rule and to tackle a chaotic economy.
A spokesman for the interim president said Morsi's Muslim Brotherhood had been offered cabinet posts and would participate in the transition. The Brotherhood, Egypt's leading Islamist movement, dismissed the remarks as lies, saying it would never yield its demand for Morsi's return.
Crisis in the Arab world's most populous state, which straddles the Suez Canal and has a strategic peace treaty with Israel, raises alarm for its allies in the region and the West.
Morsi's removal has bitterly divided Egypt, with thousands of his supporters maintaining a vigil in a Cairo square to demand his return, swelling to tens of thousands for mass demonstrations every few days.
Two people were killed at a bridge in central Cairo where police and local Morsi opponents clashed with some of his supporters who were blocking a route across the River Nile overnight. Another five were killed in the Cairo district of Giza, said the head of emergency services, Mohamed Sultan.
Morsi is being held incommunicado at an undisclosed location. He has not been charged with any crime but the authorities say they are investigating him over complaints of inciting violence, spying and wrecking the economy.
A week of relative calm had suggested peace might be returning, but that was shattered by the street battles into the early hours of Tuesday morning, the bloodiest since more than 50 Morsi supporters were killed a week ago.
“We were crouched on the ground, we were praying. Suddenly there was shouting. We looked up and the police were on the bridge firing tear gas down on us,” said pro-Morsi protester Adel Asman, 42, who was coughing, spitting and pouring Pepsi on his eyes to ease the effect of tear gas.
The new cabinet is mainly made up of technocrats and liberals, with an emphasis on resurrecting an economy wrecked by two and a half years of turmoil.
Saudi Arabia, the United Arab Emirates and Kuwait – rich Gulf Arab states happy at the downfall of the Brotherhood – have promised a total of $12 billion in cash, loans and fuel.
Investors do not expect major reforms before a permanent government is put in place. The new planning minister, Ashraf al-Arabi, said on Monday that the Arab money would sustain Egypt through its transition and it did not need to restart talks with the International Monetary Fund on a stalled emergency loan.
Egypt had sought $4.8 billion in IMF aid last year, but months of talks ran aground with the government unable to agree on cuts in unaffordable subsidies for food and fuel. Arabi's comments could worry investors who want the IMF to prod reform.
Ahmed Elmoslmany, spokesman for interim President Adli Mansour, said the authorities expected the Brotherhood and other Islamists to agree to participate in national reconciliation and had offered them positions in the interim cabinet.
“I am hoping and expecting, and I am in contact with members from the Muslim Brotherhood, and I can see there is an acceptance to the idea,” he said.
But senior Brotherhood figure Mohamed El-Beltagi said the movement had not been offered posts, and would reject them if it had. “We will not see reconciliation unless it's on the basis of ending the military coup,” Beltagi said at a square near a Cairo mosque where thousands of Morsi supporters have maintained a vigil into its third week.
By sunrise calm had returned. The unrest is more localized than in the days after Morsi was toppled when 92 people died, but Egyptians still worry about the continued unrest.
At Tahrir Square, rallying point for anti-Morsi protesters, a Reuters reporter saw teenagers in civilian T-shirts being handed rifles by troops in an armored vehicle. It was not clear if they were civilians or security personnel in plain clothes.
The violence took place on the last night of a two-day visit by U.S. Deputy Secretary of State William Burns, the first senior Washington official to arrive since the army's takeover.
Washington, which supports Egypt with $1.5 billion a year mainly for its military, has so far avoided saying whether it regards the military action as a “coup”, language that would require it to halt aid.
The United States was never comfortable with the rise of Morsi's Brotherhood but had defended his legitimacy as Egypt's first elected leader. Its position has attracted outrage from both sides, which accuse it of meddling in Egypt's affairs.
“Only Egyptians can determine their future,” Burns told reporters at the U.S. embassy on Monday. “I did not come with American solutions. Nor did I come to lecture anyone. We will not try to impose our model on Egypt.”
The Islamist Nour Party and the Tamarud anti-Morsi protest movement both said they turned down invitations to meet Burns. A senior State Department official denied Burns had been shunned.
“I don't think we're losing influence at all,” the U.S. official said. “I don't know what meetings he has, but he has seen a range of people in Cairo in the interim government, in civil society … so it's hard to say he has been spurned by both sides. I don't accept that is the case.”
At the bridge in the early hours, young men, their mouths covered to protect them from tear gas, threw stones at police and shouted pro-Morsi and anti-military slogans, as well as “Allahu Akbar!” (God is greatest).
Military helicopters hovered overhead and police vans were brought in to quell the trouble. When that didn't work, dozens of riot police moved in. Medics treated men with deep gashes to their eyes and faces nearby.
“It's the army against the people, these are our soldiers, we have no weapons,” said Alaa el-Din, a 34-year-old computer engineer, clutching a laptop during the melee. “The army turned against the Egyptian people.”
Many of the top Brotherhood figures have been charged with inciting violence, but have not been arrested and are still at large. The public prosecutors' office announced new charges against seven Brotherhood and Islamist leaders on Monday.
The fast-paced army-backed “road map” to full civilian rule calls for a new constitution to be hammered out within weeks and put to a referendum, followed by parliamentary elections in about six months and a presidential vote soon after.
A former ambassador to the United States has been named foreign minister and a U.S.-educated economist is finance minister. A police general was put in charge of the supply ministry, responsible for the huge distribution system for state-subsidized food and fuel.
A musician was named culture minister, an appointment with symbolic overtones: she had been head of the Cairo Opera until she was fired by Morsi's Islamist government two weeks ago, prompting artists and intellectuals to besiege the ministry.
Additional reporting by Tom Finn, Yasmine Saleh, Edmund Blair, Alexander Dziadosz, Shadia Nasralla, Ali Abdelaty, Omar Fahmy, Peter Graff, Patrick Werr and Mike Collett-White in Cairo, Yusri Mohamed in Ismailia and Lesley Wroughton in Washington; Writing by Mike Collett-White and Peter Graff; editing by David Stamp