Protesters seeking the ouster of the Islamist president remained camped out at Cairo's Tahrir Square, the birthplace of the 2011 uprising, gearing up for a third day of anti-Morsi rallies.
Across town, Morsi's Islamist backers have hunkered down at their own rally site, vowing to resist what they depict as a threat of a coup against a legitimately elected president.
The military's ultimatum, read Monday on state TV, put enormous pressure on Morsi to step down and sent giant crowds opposing the president in Cairo and other cities into delirious celebrations of singing, dancing and fireworks.
But it also raised worries on both sides that the army could take over outright as it did after the 2011 ouster of autocrat Hosni Mubarak and raised the risk of a backlash from Morsi's Islamist backers, including his powerful Muslim Brotherhood and hard-liners, some of whom once belonged to armed militant groups.
Pro-Morsi marches numbering in the several thousands began after nightfall Monday in a string of cities around the country, sparking clashes in some places. An alliance of the Brotherhood and Islamists read a statement at a televised conference calling on people to rally to prevent "any attempt to overturn" Morsi's election a year ago.
A line of around 1,500 men with shields, helmets and sticks — assigned with protecting the rally — stamped their feet in military-like lines, singing, "Stomp our feet, raise a fire. Islam's march is coming."
After midnight, Morsi's office issued a statement saying a "modern democratic state" was one of the main achievements of the anti-Mubarak uprising, adding, "With all its force, Egypt will not allow itself to be taken backward."
While not bluntly rejecting the ultimatum, it said Morsi was still reviewing the military statement and that some parts of it "could cause disturbances in the complicated national scene."
President Barack Obama said the U.S. is committed to democracy in Egypt, not any particular leader. Traveling in Tanzania, Obama said that although Morsi was democratically elected, the government must respect its opposition and minority groups.
Egypt's presidency said Morsi received a phone call from Obama, who said the U.S. administration "supports peaceful democratic transition in Egypt."
The military's statement came on the second day straight day of anti-Morsi protests nationwide, and even though many of the opposition supporters welcomed it, it triggered echoes of a time when the generals were in power following Mubarak's ouster.
Many of those now in the anti-Morsi campaign then led demonstrations against military rule, angered by its management of the transition and heavy hand in the killing of protesters.
Hours after its announcement, the military issued a second statement on its Facebook page denying it intended a coup. "The ideology and culture of the Egyptian armed forces does not allow for the policy of a military coup," it said.
In its initial statement, the military said it would "announce a road map for the future and measures to implement it" if Morsi and its opponents cannot reach a consensus within 48 hours — a virtual impossibility. It promised to include all "patriotic and sincere" factions in the process.
The military underlined it will "not be a party in politics or rule." But it said it has a responsibility to find a solution because Egypt's national security is facing a "grave danger," according to the statement.
It did not detail the road map, but it heavily praised the massive protests that began Sunday demanding that Morsi step down and that early elections be called — suggesting that call had to be satisfied. It said the protests were "glorious," adding that the participants expressed their opinion "in peaceful and civilized manner." It urged "the people's demands to be met."
Morsi met with military chief Abdel-Fattah el-Sissi and Prime Minister Hesham Kandil, according to the president's Facebook page, without giving details. Associated Press calls to presidential spokesmen were not answered.
In a sign of Morsi's growing isolation, five Cabinet ministers said they have resigned, the state MENA news agency reported. The five were the ministers of communications, legal affairs, environment, tourism and water utilities. The foreign minister also submitted his resignation, government officials said, speaking on condition of anonymity because they were not authorized to talk to the press. The governor of the strategic province of Ismailia on the Suez Canal, Hassan el-Rifaai, also quit.
Sunday's protests on the first anniversary of Morsi's inauguration were the largest seen in the country in the 2 1/2 years of turmoil since Egyptians first rose up against Mubarak in January 2011. Millions packed Tahrir Square, the streets outside the Ittihadiya presidential palace and main squares in cities around the country.
Violence broke out in several parts of the country, often when marchers came under gunfire, apparently from Islamists. In Cairo, anti-Morsi youth attacked the main headquarters of the Muslim Brotherhood with stones and fire bombs, while Brotherhood supporters barricaded inside opened fired on them. The clash ended early Monday when the protesters broke into the luxury villa and ransacked it, setting fires.
Nationwide, at least 16 people were killed Sunday and more than 780 injured, Health Ministry spokesman Yehya Moussa told state television.
Earlier, the group organizing the anti-Morsi protests, Tamarod, Arabic for "Rebel," issued an ultimatum of its own, giving Morsi until Tuesday afternoon to step down or it would escalate the rallies.
Under a framework drawn up by Tamarod, after Morsi steps down, the head of the Supreme constitutional Court would become an interim president and a technocrat government would be formed. An expert panel would write a new constitution to replace the one largely drafted by Islamists, and a new presidential election would be held in six months.
For Islamists, however, the idea of Morsi stepping down is an inconceivable infringement on the repeated elections they won since Mubarak's fall, giving them not only a longtime Brotherhood leader as president but majorities in parliament.
Morsi and Brotherhood officials say they are defending democratic legitimacy and some have depicted the protests as led by Mubarak loyalists trying to return to power. But many of his Islamist allies have also depicted it as a fight against Islam.
"The military has sacrificed legitimacy. There will be a civil war," said Manal Shouib, a 47-year-old physiotherapist at the pro-Morsi rally outside the Rabia al-Adawiya Mosque not far from Ittihadiya.
Outside the palace, protesters contended that Morsi could not survive with only the Islamist bloc on his side.
"It is now the whole people versus one group. What can he do?" said Mina Adel, a Christian accountant. "The army is the saviour and the guarantor for the revolution to succeed."
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