Cairo: Egypt`s embattled President Hosni Mubarak tried to buy himself some time in the face of defiant street protests vowing to boost public sector pay packets by 15 percent.
The 82-year-old strongman met his new-look cabinet for the first time as the regime battled to get the economy moving again despite ongoing demonstrations by pro-democracy activists who have occupied a Cairo square.
The United States, meanwhile, urged Egypt to uphold existing treaties, in apparent reference to the country`s peace agreement with Israel.
Washington "will be a partner" to an Egyptian government which "will uphold the treaties and obligations" by which Cairo is presently bound, US President Barack Obama`s spokesman Robert Gibbs said.
According to the official MENA news agency, the cabinet approved a plan to increase state sector salaries by 15 percent from April and to spend another 6.5 billion Egyptian pounds (940 million dollars) boosting pensions.
The raise might reassure Mubarak`s partisans in Egypt`s large bureaucracy and security forces, but there was no sign that the demonstrators who have now spent two weeks in Tahrir Square are ready to cede ground.
Campaigners sat under the tracks of army tanks deployed around the square, fearful that any movement by the military could be designed to drive out the protesters or abandon them to the mercy of pro-regime thugs.
Activists also kept up the pressure by barring access to the Mugamma, the heart of Egypt`s bureaucracy, which dominates the square, despite dozens of people seeking access to get documents such as passports processed.
In other government moves to revive economic life, the nightly curfew in three cities including Cairo was pushed back to 8:00 pm (1800 GMT) to 6:00 am, and the stock exchange said it would reopen on Sunday.
The Cairo bourse closed down 10 points on January 27, after 70 billion Egyptian pounds (12 billion dollars) was wiped off shares over two days.
Mubarak, meanwhile, met with Vice President Omar Suleiman, parliament speaker Fathi Surur and the head of Egypt`s appeals court, Sari Siyam, state news agency MENA said.
On Sunday, Suleiman -- Mubarak`s key lieutenant and possible successor -- tried to appease the revolt by inviting several opposition groups to join him on a panel to pilot democratic reform.
But the demonstrators were unimpressed and vowed to maintain their vigil.
Opposition parties, including the powerful Muslim Brotherhood, repeated their demand that Mubarak himself must stand down or immediately delegate his powers to Suleiman.
And there was scant relief for the strongman in the Western capitals where he was once hailed as a close ally and bulwark of Middle East stability.
Obama says Egypt has changed for ever since its street revolt erupted on January 25 and has called for a "representative government" in Cairo, although he stopped short of urging Mubarak to quit immediately.
The government said the parties agreed to set up a committee to examine constitutional amendments by March, while an office would look at complaints over the treatment of political prisoners and loosen media curbs.
A strict emergency law would be lifted "depending on the security situation," the government said.
But Suleiman refused another key demand of the opposition, saying he would not assume Mubarak`s powers and rule in his place during the transition.
Not all of the opposition movements involved in the revolt against Mubarak`s rule were present at the talks. Former UN nuclear watchdog head and leading dissident Mohamed ElBaradei was not invited, and has criticised the talks.
The Muslim Brotherhood, still officially banned, said it had agreed to take part because it wanted to determine if the government was serious about reform, but warned that the initial concessions were insufficient.
Meanwhile, the White House spokesman said Washington has not been in contact with the Muslim Brotherhood.