SANAA (Reuters) - Yemen's president appointed a new prime minister on Tuesday as part of a deal with Shi'ite Muslim fighters who control the capital to start leaving the city, but they rejected the nomination, suggesting no end to the deadlock is in sight.
Houthi fighters seized Sanaa with little resistance last month after overrunning an army brigade affiliated to the rival but moderate Islamist Islah party, making them effectively the power brokers in the country.
The Houthis' rejection of the appointment adds fresh uncertainty to weeks of political volatility following the movement's seizure of the capital of 2 million people.
The group, which has ties to Iran, has resisted demands to quit the capital, saying that an agreement they signed with President Abd-Rabbu Mansour Hadi to make them a part of the government gives them the right to stay until a new prime minister has been named.
Hadi named one of his top associates to the post on Tuesday, his office director Ahmed Awad bin Mubarak, state news agency Saba said.
But the Houthis, officially known as Ansarullah, rejected the appointment.
Abdelmalek al-Ejri, a member of the Ansarullah political bureau, said Hadi had suggested bin Mubarak as prime minister after a committee of advisers representing all major political parties failed to agree on a candidate among five names the president had suggested.
"President Hadi bears the responsibility of this decision," Ejri told Reuters.
The Houthis control government bodies and last week ordered the Finance Ministry to suspend all payments except salaries to state employees.
Bin Mubarak, who holds a doctorate in business administration from Baghdad University, was born in 1968 in the southern Yemeni port city of Aden. He previously served as a consultant for international projects in Yemen before becoming director of the presidential office.
In March last year, bin Mubarak served as secretary general of Yemen's "conference of national dialogue", comprising representatives of all political parties and civic groups which Hadi had convened to map out reforms.
(Reporting by Mohammed Ghobari; Writing by Sami Aboudi and Maha El Dahan; Editing by William Maclean and Alison Williams)