The standoff poses one of the hardest tests for the nation's liberal and secular opposition since Hosni Mubarak's ouster nearly two years ago. Failure to sustain protests and eventually force Mohammed Morsi to loosen control could consign it to long-term irrelevance.
Clashes between the two sides spilled onto the streets for a third day since the president issued edicts that make him immune to oversight of any kind, including that of the courts.
A teenager was killed and at least 40 people were wounded when a group of anti-Morsi protesters tried to storm the local offices of the political arm of the president's Muslim Brotherhood in the Nile Delta city of Damanhoor, according to security officials.
It was the first reported death from the street battles that erupted across much of the nation on Friday, the day after Morsi's decrees were announced. The officials, who spoke on condition of anonymity because they were not authorized to speak to the media, identified the boy as 15-year-old Islam Hamdi Abdel-Maqsood.
The tensions also dealt a fresh blow to the economy, which has suffered due to the problems plaguing the Arab world's most populous nation since Mubarak's ouster.
Egypt's benchmark EGX30 stock index dropped 9.59 percentage points Sunday in the first trading session since Morsi issued his decrees. The losses were among the biggest since the turbulent days and weeks immediately after Mubarak's ouster in a popular uprising last year. The loss in the value of shares was estimated at close to $5 billion.
The judiciary, the main target of the edicts, has pushed back, calling the decrees a power grab and an "assault" on the branch's independence. Judges and prosecutors stayed away from many courts in Cairo and other cities on Sunday.
But the nation's highest judicial body, the Supreme Judiciary Council, watered down its opposition to the decrees on Sunday. It told judges and prosecutors to return to work and announced that its members would meet with Morsi on Monday to try to persuade him to restrict immunity to major state decisions like declaring war or martial law or breaking diplomatic relations with foreign nations.
Morsi supporters insist that the measures were necessary to prevent the courts, which already dissolved the elected lower house of parliament, from further holding up moves to stability by disbanding the assembly writing the new constitution, as judges were considering doing. Both the parliament and the constitutional assembly are dominated by Islamists. Morsi accuses Mubarak loyalists in the judiciary of seeking to thwart the revolution's goals and barred the judiciary from disbanding the constitutional assembly or parliament's upper house.
Opposition activists, however, have been adamant since the crisis first erupted that they would not enter a dialogue with Morsi's regime before the decrees are rescinded.
Protesters also clashed with police at Cairo's Tahrir Square, the birthplace of the mass protests that toppled Mubarak, and in the side streets and avenues leading off the plaza. The Interior Ministry, which is in charge of the police, said 267 protesters have been arrested and 164 policemen injured since the unrest began a week ago, initially to mark the anniversary of street protests a year ago against the nation's then-military rulers. Forty-two protesters were killed in those demonstrations.
The ministry did not say how many protesters were injured in the latest clashes in Tahrir, but security officials put the figure at 260.
Hundreds of protesters staging a sit-in in Tahrir have vowed not to leave before Morsi rescinds his decrees. The two sides also have called for massive rival protests Tuesday in Cairo, signalling a protracted struggle.
Morsi's office issued an English-language statement late Sunday defending his decrees and repeating the argument he used when addressing supporters Friday outside his Cairo palace — that they were designed to bolster the country's transition to democratic rule and dismantle Mubarak's old regime.
"The presidency reiterates the temporary nature of the said measures, which are not meant to concentrate powers," it said. The statement also pledged Morsi's commitment to engaging all political forces on the drafting of a new constitution. Secular and Christian members withdrew from the panel drafting the document, alleging that the Islamists who dominate the body have hijacked the process to produce a charter with an Islamist slant.
Nader Omran, of the Brotherhood's Freedom and Justice party, said any changes to the decrees were "out of the question" but Morsi might "make pledges, vows or addendums explaining his position to clarify the decrees."
He said Morsi would hand over his legislative powers to parliament's upper chamber once a new constitution is adopted in a nationwide referendum and ahead of parliamentary elections. The presidency did not confirm the claim, but doing so would leave the Egyptian leader with the state's executive and legislative powers until around April.
The move also has caused some internal discord among the Morsi camp, with one aide, Samer Marqous, already resigning to protest the "undemocratic" decree.
Another Morsi adviser Ayman al-Sayyad wrote on his Twitter account that the president met Sunday for the second time in as many days with his 17-member advisory council and three of his assistants.
"I think it (the meeting) produced a genuine realization of the gravity of the situation ... We were candid today in our meeting with the president and we now expect practical steps on the ground." He did not elaborate.
Leading Egyptian democracy advocate Mohammed ElBaradei, a Nobel Peace Laureate and a former director of the U.S. nuclear agency, warned Saturday of increasing turmoil that could potentially lead to the military stepping in unless Morsi rescinds his new powers.
Egypt's liberal and secular groups — long divided, weakened and uncertain as Islamist parties rose to power in the months after the revolution — are seeking to rally in response to the decrees as the stakes are high. The fractured opposition came together as the engine of the 18-day uprising that forced Mubarak to step down after 29 years in power, bringing millions out on the streets, but they have failed to recapture that energy after months of setbacks.
Morsi, meanwhile, already has backed down twice in high-profile battles with the judiciary in the five months he's been in office. The U.S.-trained engineer failed to challenge the court ruling dissolving parliament's powerful lower chamber and had to rescind his decision to fire the country's attorney-general, Mubarak-era appointee Abdel-Maguid Mahmoud, in October. He fired him on Thursday as part of his edicts.
Associated Press writer Aya Batrawy contributed to this report.
Also on HuffPost