Tahrir tear gas
A protester returns a police tear gas canister during clashes in Tahrir Square in Cairo, Sunday, Nov. 25, 2012. Reuters/Mohamed Abd El Ghany

Egyptian President Mohammed Morsi’s office said Sunday it was committed to engaging "all political forces" and stressed the "temporary nature" of the decree expanding his powers that has enraged much of the country.

Egypt's stock market plunged on Sunday in its first day open since the surprise decree.

"This declaration is deemed necessary in order to hold accountable those responsible for the corruption as well as other crimes during the previous regime and the transitional period," the presidency said in a statement reported by Reuters.

Facing a storm of protest from judges and political opponents who accuse Morsi of turning into a new dictator, the presidency said the decree was "not meant to concentrate powers," but rather to devolve them and to avoid the politicization of the judiciary.

It also aimed to "abort any attempt" to dissolve either the body writing Egypt's constitution or the upper house of parliament, both of them dominated by Islamists allied to Morsi, the statement added.

"The presidency stresses its firm commitment to engage all political forces in the inclusive democratic dialogue to reach a common ground and bridge the gap in order to reach a national consensus on the constitution," it added.

More than 500 people have been injured in protests since Friday, when Egyptians awoke to news that Morsi had issued a decree widening his powers and shielding them from judicial review. His supporters and opponents are both planning massive demonstrations on Tuesday that many fear will lead to more violence.

Shura Council Chairman Ahmed Fahmi, even though a member of the Muslim Brotherhood’s Freedom and Justice Party and a relative of the president, criticized the decree, Al Ahram reported. The Shura Council is the upper, consultative house of Egypt's parliament.

"We had hopes that President Morsi would put the constitutional declaration before a national referendum," Fahmi said. He also argued that the declaration "has severely divided the nation into Islamists and civilians." Fahmi urged Morsi to conduct a national dialogue with all forces to put an end to the crisis triggered by the declaration.

Sunday's stock market fall of nearly 10 percent - halted only by automatic curbs - was the worst since the uprising that toppled Hosni Mubarak in February 2011. Images of protesters clashing with riot police and tear gas wafting through Tahrir Square were an unsettling reminder of that revolution.

"We are back to square one, politically, socially," Mohamed Radwan of Pharos Securities, an Egyptian brokerage firm, told Reuters.

Judges announced on Saturday they would go on strike.

But the Supreme Judicial Council appeared not to reject the decree outright, saying it should only apply to "sovereign matters," and urged judges to return to work, the BBC reported.

Justice Minister Ahmed Mekky has begun efforts to mediate between the president and the judges.

Egyptian media reported that the president would meet the Supreme Judicial Council on Monday to discuss the decree.

Liberal politician and former U.N. nuclear weapons monitor Mohammed ElBaradei called Morsi a "dictator."

"There is no room for dialogue when a dictator imposes the most oppressive, abhorrent measures and then says 'let us split the difference'," he said in an interview with Reuters and the Associated Press.

"I am waiting to see, I hope soon, a very strong statement of condemnation by the U.S., by Europe and by everybody who really cares about human dignity."

ElBaradei and many political parties and groups announced Saturday the formation of a National Front to resist Morsi’s decree, Al Ahram reported.

The parties pledged they will not hold any meetings with Morsi until the declaration is canceled, and endorsed the street protests.

The meeting to launch the front was attended by former presidential candidates Hamdeen Sabbahi and Amr Mousa and representatives of former presidential candidate Abdel-Moneim Abul-Fotouh, as well as ElBaradei.

U.S. Sen. John McCain, R-Ariz., also voiced alarm at developments in Egypt Sunday.

Asked on ”Fox News Sunday” about the chance of a new Islamist state in Egypt, McCain replied: "I think it could be headed that way. You also could be headed back into a military takeover if things went in the wrong direction. You could also see a scenario where there is continued chaos."

"This is not what the United States and American taxpayers expect and our dollars will be directly related to the progress towards democracy, which you promised the people of Egypt, when your party and you were elected president," McCain told the news talk show Fox News Sunday.

"Our leverage, obviously, is not only the substantial billions in aid we provide, plus debt forgiveness, plus an IMF deal, but also the marshaling (of) world public opinion (that) is also against this kind of move by Mr. Morsi," he said.

President Barack Obama pledged $1 million in extra support to Egypt last year, AFP noted. This is separate from $1.3 billion in annual military funding that Washington already provides to Cairo.

The International Monetary Fund reached a deal with Egyptian authorities last week on a 22-month loan totaling some $4.8 billion to help the country overcome economic difficulties.

Protesters were camped out in central Cairo for a third consecutive day. State media reported that Morsi met for a second day with his advisers.

"I am really afraid that the two camps are paving the way for violence," Hassan Nafaa, a professor of political science at Cairo University, told Reuters. "Morsi has misjudged this, very much so. But forcing him again to relinquish what he has done will appear a defeat."

Morsi's decree drew warnings from Western countries to uphold democracy, a day after he had received glowing tributes from the United States and others for his work brokering a deal to end eight days of violence between Israel and Hamas.

"Investors know that Morsi's decisions will not be accepted and that there will be clashes on the street," Osama Mourad of Arab Financial Brokerage told Reuters.

Investors had grown more confident in recent months that a legitimately elected government would help Egypt put its economic and political problems behind it. The stock market's main index had risen 35 percent since Morsi's victory.

Just last week, investor confidence was helped by a preliminary agreement with the International Monetary Fund over a $4.8 billion loan needed to shore up state finances.

Issued Thursday night, the Morsi decree marks an effort to consolidate his influence after he successfully sidelined Mubarak-era generals in August. Analysts say it reflects Muslim Brotherhood suspicions of sections of a judiciary that is largely unreformed from the Mubarak era.

The decree defends from judicial review decisions taken by Morsi until a new parliament is elected. That vote is expected early next year.