By Alastair Macdonald and Shadia Nasralla
CAIRO (Reuters) - Egypt's president, accused of fuelling sectarian hatred, promised swift justice on Monday for a deadly attack on minority Shi'ites as he tried to quell broader factional conflict to avoid a threatened military intervention.
The army, which handed power to elected Sunni Islamists a year ago after decades of oppression, have warned Mohamed Mursi - and his liberal opponents - to end an increasingly violent deadlock or see troops back on the streets to impose order.
There was little sign of reconciliation, however. Liberals and Shi'ites accused Mursi, who announced he will address the nation on Wednesday evening, of fostering sectarian hatred by associating with radical Sunni preachers.
As the army was speaking out on Sunday, a reminder of the fragility of the polarized new order that has emerged from the revolution of 2011, a mob in a Cairo suburb was raiding a house where Shi'ites were marking a religious festival, killing four and dragging bodies through the streets to cries of "Infidels!".
Local people said police stood by and failed to intervene.
The unusually violent attack on a minority barely visible in predominantly Sunni Muslim Egypt - although, even at less than 1 percent of the population, Shi'ites still number in the hundreds of thousands - was in part a reflection of sectarian passions inflamed across the Middle East by the war in Syria.
But for the Egyptian opposition, it was also held up as more evidence that Mursi and his Muslim Brotherhood have allied with harder line Islamists to intimidate those who joined them in ousting Hosni Mubarak but who now criticize their handling of a crisis-hit economy and fear they will entrench Islamic rule.
An opposition campaign for mass rallies demanding Mursi's resignation on June 30, the anniversary of his inauguration, has been preceded by shows of strength by his supporters. More are planned across the country, starting on Tuesday.
Critics accuse Mursi of preferring to build ties with former militants and Salafist hardliners in the Islamist camp, rather than reaching toward the center. He and the Brotherhood complain their opponents are an obstinate minority who lost the election.
Liberals, secular conservatives, millions of Christians and many less engaged Egyptians simply fed up with shortages and falling living standards hope the "Tamarud - Rebel!" campaign can overcome the opposition disunity that helped the Brotherhood win the series of elections that has given it sweeping control.
But army chief General Abdel Fattah al-Sisi, who insisted he was not seeking political power and was widely believed, also seemed to warn the opposition against trying to overturn Mursi's election. He said the army would defend "the will of the people" and urged politicians to forge a consensus before next Sunday.
"The army is basically sending a warning that it won't tolerate violence. Period. That includes both sides," said Michael Walid Hanna of the Century Foundation think-tank. "Obviously what the military wants is to force a compromise."
Both Mursi and his opponents declared themselves pleased by the call to order from the military, long respected by Egyptians who tended to blame oppression under Mubarak on the police.
Mursi's spokesman Ihab Fahmy said: "We cannot even think that the army will come back and rule the country."
But there was little sign of reconciliation talks being held on Sisi's timetable.
"We are still sticking to our position that it's too late for any calls for dialogue," said Khaled Dawoud of the liberal opposition bloc. "We insist on our call for the president to resign and open the door to early elections."
Mursi's spokesman Fahmy said Mursi had previously issued an "open-ended invitation": "Our target is to defuse any tension," he said. "I think we can make it very soon ... We are confident that through dialogue we can reach this common consensus."
The president, who promised swift justice over the Shi'ite attack, announced an "important speech to the Egyptian people" on Wednesday night. He gave no detail on its theme.
After he met General Sisi and his National Security Council, Mursi's office issued a statement saying all institutions would work for peace and to defend the democratic system - Egypt's first - that stemmed from the "glorious January 25 Revolution".
The uncertainties that political deadlock has generated for the 84 million Egyptians has prompted some to hoard supplies.
A slump in tourism, weakening currency and rising world commodity prices, plus a growing population used to subsidized bread and fuel, has put pressure on government finances. That has raised fears of fuel shortages and high-summer power cuts during the Muslim holiday month of Ramadan, now two weeks away.
"The situation is unbearable. The country is falling apart," said Mohamed Emad, 52, who was taking a walk in central Cairo.
"We cannot find food, fuel, water and have electricity cuts and now heading towards a sectarian conflict. We need to wake up and think, and not listen to idiots or liar politicians."
(Additional reporting by Maggie Fick, Yasmine Saleh and Shaimaa Fayed in Cairo and Alexander Dziadosz in Zawiyat Abu Musallem; Writing by Alastair Macdonald; Editing by Alison Williams; Editing by Alison Williams)
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