New Egyptian president Mohammed Morsi faces struggle for power with military

New Egyptian president Mohammed Morsi has moved first thing into the office once occupied by his ousted predecessor Hosni Mubarak and started work on forming a government.

Mr Morsi swung into action even before he had a clear picture of what he could do after the ruling military stripped most of the major powers from his post.

The country breathed a sigh of relief that at least the question of who won the presidential runoff had been resolved on Sunday after the first free and fair elections in Egypt's modern history. People returned to work a day after a panic that sent many home early for fear that violence might erupt when the winner was announced.

Egypt's stock index closed with record gains of 7.5% in a sign of optimism after a president was named.

"His priority is the stability on the political scene," said a spokesman for Mr Morsi who said the president was in his office to consult on forming a new government and choosing his team.

Mr Morsi, from the fundamentalist Muslim Brotherhood group, is the first Islamist president of Egypt. He defeated Mubarak's last prime minister, Ahmed Shafiq, in a tight race that deeply polarised the nation.

Now he faces a daunting struggle for power with the still-dominant military rulers who took over after Mubarak's removal in the uprising.

The 60-year-old, US-trained engineer comes into office knowing little about his authorities and what he can do to resolve security and economic crises and meet the high expectations for the country's first popularly elected leader.

The contours were emerging of a backroom deal between the military and the Brotherhood that led to the ruling military council blessing Mr Morsi as president. One mediator said negotiations are still under way to hammer out political understandings.

Closed-door meetings between Brotherhood members and the ruling generals as well as mediation from different groups, including pro-reform leader Mohammed ElBaradei, were aimed at easing the crisis and defusing a political stalemate.

Brotherhood members said the election results, delayed for four days, were held up by authorities as a bargaining chip to reassure the generals in the face of mounting Brotherhood opposition to the military's tightening grip and the group's rise to power.

Before parliament was dissolved, a panel appointed by the legislature was supposed to be in charge of drafting the new constitution which would determine the role of Islam in legislation, Egypt's future political system and the role of the military.

In his first speech after being named president, Mr Morsi called for national unity and pledged he will be a "president for all Egyptians." In an effort to heal national divisions, he vowed to appoint diverse deputies including a woman and a Christian. He also has reached out to other presidential hopefuls who got significant support in the first round of elections.

His spokesman said Mr Morsi wants to form a national coalition government that will bring in technocrats and representatives of a broad variety of political factions.

Thousands of Morsi supporters, backed by some liberal and secular youth groups who drove the uprising, vowed to press on with their protest in Tahrir Square to pressure the ruling generals to rescind their decrees and reinstate parliament. Tens of thousands spent the night in Tahrir in joyous celebration of his win. But by morning, the crowds had thinned considerably.

But Brotherhood officials said the protests will continue until the military responds to their demands.

Mr Morsi faces enormous challenges of improving the economy and maintaining law and order - both of which deteriorated in the post-Mubarak period. His victory is a stunning achievement for the Muslim Brotherhood, a shadowy organisation repressed by successive regimes.

He is Egypt's first civilian president - his four predecessors all came from the ranks of the military.

AP