CAIRO President Hosni Mubarak said on Thursday he wanted to quit but that he feared his resignation would bring chaos to Egypt, as protesters demanding an end to his 30-year rule clashed with his supporters on Cairo's streets.
Mubarak's government has struggled to regain control of a nation angry about poverty, recession and political repression, inviting Islamist opponents to talks and apologising for Wednesday's bloodshed in Cairo that left 10 people dead.
A bloody confrontation gripped central Cairo where armed government loyalists fought pro-democracy demonstrators on Thursday in an uprising which is reshaping the modern history of this key U.S. ally and the Arab world's most populous nation.
"I am fed up. After 62 years in public service, I have had enough. I want to go," Mubarak, 82, who remains inside his heavily guarded palace in Cairo, said in an interview with ABC.
"If I resign today, there will be chaos," he added. Asked to comment on calls for him to resign, he said: "I don't care what people say about me. Right now I care about my country."
Protesters, who numbered some 10,000 in Tahrir (Liberation) Square during the day, prepared to defy a curfew and sleep there ahead of a big demonstration they are calling the "Friday of Departure" to mark last week's bloody "Day of Wrath" protest.
The U.S. State Department said it expected confrontation.
"We are bracing for a significant increase in the number of demonstrators on the streets and with that, given yesterday's events, the real prospects of a confrontation," said State Department spokesman P.J. Crowley.
New Prime Minister Ahmed Shafiq said the interior minister should not obstruct Friday's peaceful marches. The Interior Ministry has denied it ordered its agents or officers to attack anti-Mubarak protesters.
Mubarak blamed the Muslim Brotherhood movement for the violence and said his government was not responsible for it. "I was very unhappy about yesterday. I do not want to see Egyptians fighting each other," Mubarak told ABC.
But Crowley said Washington believed elements close to the government or Mubarak's ruling party were responsible for Wednesday's widespread violence. "I don't know that we have a sense of how far up the chain it went," Crowley said.
In a move to try to calm the disorder, Vice President Omar Suleiman said on Thursday the Muslim Brotherhood, Egypt's most organised opposition movement, had been invited to meet with the new government as part of a national dialogue with all parties.
An offer to talk to the banned group would have been unthinkable before protests erupted on Jan. 25, indicating the giant strides made by the reformist movement since then. But scenting victory, they have refused talks until Mubarak goes.
ARMY ROLE CRITICAL
Protesters in Tahrir Square, dominated now by a youthful hard core including secular middle-class graduates and mostly poorer Islamist activists from the Brotherhood, barely listened, saying the concessions were too little and too late.
Opposition leaders including the liberal figurehead Mohamed ElBaradei and the Muslim Brotherhood said again that Mubarak, who wants to stay on until September elections, must go before they would negotiate with the government.
The overture came after Shafiq apologised for the violence and the breakdown in law and order. Shafiq also said he did not know who was responsible for the bloodshed, blamed by protesters on undercover police.
United Nations human rights chief Navi Pillay said up to 300 people may have died in the bloody uprising.
The army's role in shaping events is crucial. Only on Thursday did soldiers set up a clear buffer zone around the square to separate factions after having stood by. That did not prevent new clashes, as groups pelted each other with rocks.
"Allahu Akbar, the army and the people are hand in hand," chanted protesters barricaded in Tahrir Square.
Doctors in makeshift hospitals at the scene said at least 10 people were dead and 800 wounded after gunmen and stick-wielding Mubarak supporters attacked protesters on the streets.
Close to the Egyptian Museum, home to 7,000 years of civilisation, men fought with rocks, clubs and makeshift shields, as U.S.-built tanks from the Western-funded army made sporadic efforts to intervene.
The political battle behind the scenes has implications for competing Western and Islamist influence over the Middle East and its oil. European leaders joined the United States in urging their long-time Arab ally to start handing over power.
The government, newly appointed in a reshuffle that failed to appease protesters, stood by the president's insistence that he will go but only when his fifth term ends in September.
Mubarak told ABC he felt relief after saying he would not run for president again, and said he that he had never intended for his son Gamal to be president after him, as had been widely believed. Gamal was in the room during the interview.
Ten days ago, that would have been shock news. It surprised no one today.
OBAMA DOESN'T UNDERSTAND, MUBARAK SAYS
Mubarak keeps portraying himself as a bulwark against anarchy, or a seizure of power by Islamist radicals.
The opposition won increasingly vocal support from Mubarak's long-time Western backers for a swifter handover of power.
"This process of transition must start now," the leaders of Britain, France, Germany, Italy and Spain said in a statement.
They all echoed the message from U.S. President Barack Obama that an orderly transition of power must start immediately.
Mubarak described Obama as a very good man, but when asked by ABC if he felt that the United States had betrayed him, he said he told the U.S. president: "You don't understand the Egyptian culture and what would happen if I step down now."
There were several reports of foreign journalists being arrested or harassed. Angry men carjacked an ABC crew and threatened to behead the journalists, but the crew managed to talk its way free, said the network which interviewed Mubarak.
This is a trial of strength in which army commanders are expected to seek to preserve their institution's influence and wealth in the face of a massive popular rejection of the old order, widely regarded as brutal, corrupt and wasteful.
The protests were inspired by events in Tunisia, where its leader Zine al-Abidine Ben Ali was forced to flee last month.
Oil prices have climbed on fears the unrest could spread to affect oil giant Saudi Arabia or interfere with oil supplies from the Red Sea to the Mediterranean through the Suez Canal.
Brent crude rose above $103 a barrel on Thursday.
Though less numerous than earlier in the week, there were demonstrations in Suez and Ismailia, industrial cities where inflation and unemployment have kindled the sort of dissent that hit Tunisia and which some believe could ripple in a domino effect across other autocratic Arab states.
There were also protests in the port city of Alexandria.
(Reporting by Edmund Blair, Samia Nakhoul, Patrick Werr, Dina Zayed, Marwa Awad, Shaimaa Fayed, Alexander Dziadosz, Yasmine Saleh, Sherine El Madany, Yannis Behrakis, Jonathan Wright, Andrew Hammond, Tom Perry and Alison Williams in Cairo, Myra MacDonald in London and Leigh Thomas in Paris; Writing by Peter Millership; Editing by Louise Ireland)