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* Mursi, Shafiq go through to presidential run-off

* Defeated moderate Islamist candidate decries outcome

* Turnout 46 percent, election complaints rejected

* Protesters hit streets in Alexandria

(Adds protest, Salafi party backing Mursi)

By Shaimaa Fayed and Dina Zayed

CAIRO, May 28 (Reuters) – Egypt headed for a divisive duel

between a Muslim Brother and an ex-military man in a run-off for

a president to replace ousted leader Hosni Mubarak, after

election results on Monday that one losing candidate called

“dishonest”.

The electoral committee confirmed that the Muslim

Brotherhood’s Mohamed Mursi and former air force chief and

Mubarak ally Ahmed Shafiq had won through to the second round of

Egypt’s first genuinely contested presidential election.

Mursi topped the poll with 24.3 percent of the vote,

followed by Shafiq with 23.3 percent. Turnout was 46 percent.

A Mursi-Shafiq run-off poses an agonising dilemma for many

of Egypt’s 50 million voters who are equally wary of Islamist

rule or a return to a military-backed authoritarian system.

About 200 protesters demonstrated in Alexandria, Egypt’s

second city after the results emerged, chanting: “No to Shafiq

and to the Brotherhood. The revolution is still in the square.”

About half of first-round votes went to candidates somewhere

in the middle ground – from leftist firebrand Hamdeen Sabahy,

third-placed with 20.4 percent, to moderate Islamist Abdel

Moneim Abol Fotouh, with 17.2 percent, and former Arab League

secretary-general Amr Moussa, with 10.9 percent.

All three filed complaints about the voting, all of which

were rejected by the six judges forming the electoral committee.

The disputes add rancour to an already messy and often

bloody transition to democracy since generals took over from

Mubarak when a popular uprising forced him out on Feb. 11, 2011.

“I reject these results and do not recognise them,” said

Abol Fotouh, a former Brotherhood member, alleging that votes

had been bought and representatives of candidates had been

denied access to polling stations during the count.

“The national conscience does not allow for labelling these

elections honest,” said Abol Fotouh, the only one of the 12

first-round contenders to reject the result outright.

Moussa said earlier that “question marks” hung over the

vote. “There were violations, but this should not change our

minds on democracy and the necessity of choosing our president.”

“ROLE MODEL”

The Muslim Brotherhood sought to muster a coalition to help

Mursi against Shafiq, who calls Mubarak his “role model”.

Neither man came close to winning the more than 50 percent

of the vote needed to clinch the presidency in the first round.

The close contest has set both contenders scrambling for

support, particularly the Muslim Brotherhood, which is trying to

draw losing candidates and other political forces into a broad

front to prevent a “counter-revolutionary” Shafiq victory.

The ultra-orthodox Salafi Islamist party Al-Nour has said it

will now back Mursi, after siding with Abol Fotouh in the first

round. The party has the second biggest bloc in parliament after

the Brotherhood’s Freedom and Justice Party (FJP).

Shafiq is also seeking wider backing, even posing as a

protector of the revolt that toppled Mubarak.

Shafiq’s supporters see him as the man to impose security

and crack down on protests viewed as damaging to the economy.

Mursi appeals to Egyptians keen for Islamists to run a

deeply religious country within a democratic framework.

“I would bet that at some stage in the next two weeks there

will be an upsurge in violence,” said a Western diplomat, who

predicted that such a flare-up would probably boost the chances

of Shafiq, given his promises to enforce law and order.

The military council has promised to lift a hated state of

emergency in force throughout Mubarak’s 30-year rule on May 31.

It has also pledged to hand over to the new president by July 1.

A Brotherhood source, who asked not to be named, said the

Islamist group’s FJP had prepared a menu of options to tempt

rival groups and politicians to its side.

These include creating a five-member advisory council to

advise the president; assigning the posts of prime minister or

vice-president to Abol Fotouh and Sabahy; distributing cabinet

posts to other parties and offering compromises on planned laws

and on an assembly tasked with drafting a new constitution.

BROTHERHOOD CONTACTS

So far Abol Fotouh and Sabahy have appeared wary of such

overtures, staying away from meetings called by the Brotherhood

to discuss strategy for the second round of an election supposed

to crown Egypt’s turbulent army-led transition to democracy.

Moussa, a former foreign minister once seen as favourite to

win the presidency, but who appears to have managed only fifth

place, said he would stay in politics but was seeking no post.

“We cannot accept a re-creation of the (Mubarak) regime,” he

declared, but said he had not yet spoken with the Brotherhood on

any anti-Shafiq coalition. “I am not going to consult them, but

if they want to consult me, I will consider it.”

Uncertainty over the election has hit Egyptian share prices.

The main index dropped another 1.3 percent on Monday after

suffering a 3.5 percent drop on Sunday, its worst in nine weeks.

“Investors are afraid because now we have two extreme

candidates facing one another. No one will invest heavily in

Egypt … until it becomes clear who is president,” said Amr

Chamel, a trader at Pharos Securities.

“If Shafiq wins, foreign investors will feel at ease but

there may be street protests against him. A Mursi presidency

would scare off foreign investment.”

International ratings agency Fitch said the Mursi-Shafiq

contest could “exacerbate social unrest and prolong political

stalemate”, but said in the longer term both favoured policies

that could stabilise Egypt’s sovereign credit profile.

(Additional reporting by Marwa Awad, Tamim Elyan, Tom Perry,

Edmund Blair and Patrick Werr; Writing by Alistair Lyon; Editing

by Edmund Blair)