SEVEN people were killed and more than 260 were wounded when Islamist supporters of Mohamed Mursi fought opponents of the deposed Egyptian president and security forces.

Egyptian authorities rounded up more than 400 people over fighting, nearly two weeks after the army removed Mr Mursi in response to mass demonstrations against him.

Interim Prime Minister Hazem el-Beblawi is forming a government to lead Egypt through a "road map" to restore full civilian rule and to tackle a chaotic economy.

A spokesman said Mr Mursi's Muslim Brotherhood had been offered cabinet posts and would participate in the transition.

The Brotherhood, Egypt's leading Islamist movement, dismissed the remarks as lies, saying it would never yield its demand for Mr Mursi's return.

Crisis in the Arab world's most populous state raises alarm for its allies in the region and the West.

Mr Mursi's removal has bitterly divided Egypt, with thousands of his supporters maintaining a vigil in a Cairo square to demand his return, swelling to tens of thousands for mass demonstrations every few days.

Two people were killed at a bridge in central Cairo where police and local Mursi opponents clashed with some of his supporters who were blocking a route across the River Nile overnight. Another five were killed in the Cairo district of Giza, said the head of emergency services, Mohamed Sultan. Mr Mursi is being held at an undisclosed location. He has not been charged with any crime.

A week of relative calm was shattered by the street battles into the early hours of yesterday, the bloodiest since more than 50 Mursi supporters were killed a week ago.

The new cabinet is mainly made up of technocrats and liberals, with an emphasis on resurrecting an economy wrecked by two and a half years of turmoil.

Saudi Arabia, the United Arab Emirates and Kuwait – rich Gulf Arab states happy at the downfall of the Brotherhood – have promised a total of $12 billion (£7.9bn) in cash, loans and fuel.

Investors do not expect major reforms before a permanent government is put in place.

The new planning minister, Ashraf al-Arabi, said that the Arab money would sustain Egypt through its transition and it did not need to restart talks with the International Monetary Fund on a stalled emergency loan.