UPDATE 2-Egypt army issues threats ahead of street confrontation
* Fears of violence as rival camps mobilise for rallies
* Interim PM cites fear of casualties
* Brotherhood says aims for biggest protest yet
(Recasts with army statement, ultimatum, White House)
CAIRO, July 25 (Reuters) - Egypt's army threatened on Thursday to turn its guns on those who use violence, its starkest warning yet ahead of what both sides expect will be a bloody showdown in the streets between supporters and opponents of deposed president Mohamed Mursi.
An army official said the military had issued an ultimatum to Mursi's Muslim Brotherhood, giving the Islamist group until Saturday to sign up to a plan for political reconciliation which it has so far spurned.
The army has summoned Egyptians into the streets for Friday and made clear it intends the day to mark a turning point in its confrontation with the followers of Mursi, the elected leader the generals removed on July 3.
Mursi's Brotherhood, which has maintained a street vigil for a month with thousands of followers demanding Mursi's return, has called its own crowds out for counter-demonstrations across the country in a "day to remove the coup".
Both sides have dramatically escalated rhetoric ahead of Friday's demonstrations. The Brotherhood accused the army of pushing the nation towards civil war and committing a crime worse than destroying Islam's holiest site.
The army issued its warning in a statement posted on a Facebook page. It will not "turn its guns against its people," the statement said, "but it will turn them against black violence and terrorism which has no religion or nation".
A military official said the army had given the Brotherhood 48 hours from Thursday afternoon to join the political process. He did not reveal what the consequences would be if the Brotherhood refuses.
Army chief General Abdel Fattah al-Sisi has called on Egyptians to take to the streets and give him a "mandate" to take action against the violence that has convulsed Egypt since he shunted its first freely elected president from power.
The Brotherhood, an Islamist movement that won repeated elections since the fall of autocrat Hosni Mubarak in 2011, says it is the authorities themselves that have stirred up the violence to justify their crackdown.
The main anti-Mursi youth protest group, which has rallied behind the army, said its supporters were taking to the streets to "cleanse Egypt".
The West is increasingly alarmed at the course taken by Egypt, a strategic hinge between the Middle East and North Africa, since the Arab Spring protests brought down Mubarak and ended decades of autocratic rule.
Signalling its displeasure, Washington has delayed delivery of four F-16 fighter jets to Cairo. On Thursday, the White House urged the army to exercise "maximum restraint and caution".
The United States has yet to decide whether to call the military's takeover a "coup", language that would require it to halt $1.5 billion it sends in annual aid, mostly for the army.
For weeks, the authorities have rounded up some Brotherhood officials but tolerated the movement's presence on the streets, with thousands of people attending its vigil demanding Mursi's return and tens of thousands appearing at its demonstrations.
That patience seems to have run out. Prime Minister Hazem el-Beblawi, head of the interim cabinet installed by the army, said there was escalating violence by increasingly well-armed protesters, citing a bomb attack on a police station.
"The presence of weapons, intimidation, fear - this causes concern, especially when there are calls for many to come out tomorrow from different sides," he told a news conference.
After a month in which close to 200 people have died in violence triggered by Mursi's downfall, many fear the protests will lead to more bloodshed.
Past incidents of violence have tended to run through the night and into the following day. Another security official forecast violence beginning Friday night and stretching into Saturday, the period covered by the army's ultimatum. He also indicated that the two-day period was expected to be decisive.
"The history of Egypt will be written on those days," said the official, part of a security establishment that accuses the Islamists of turning to violence.
The Brotherhood blames the violence on the authorities, accusing them of stirring it up to justify a crackdown with the ultimate goal of wiping the group out.
Reiterating his group's commitment to peaceful protest, senior Brotherhood politician Farid Ismail accused the security services of readying militias to attack Mursi supporters, adding that Sisi aimed to drag Egypt into civil war.
"His definition of terrorism is anyone who disagrees with him," Ismail told Reuters. "We are moving forward in complete peacefulness, going forward to confront this coup."
Muslim Brotherhood leader Mohamed Badie issued a statement accusing Sisi of committing a crime worse than destroying the Kabaa - the site in Mecca to which all Muslims face when they pray - "brick by brick".
But many Egyptians are no less passionately backing the army, determined to see the Brotherhood reined in.
"There are men carrying guns on the street ... We will not let extremists ruin our revolution," said Mohammed Abdul Aziz, a spokesman for Tamarud, an anti-Mursi petition campaign that mobilised protests against his rule.
"Tomorrow we will cleanse Egypt," he told Reuters.
Sisi's speech on Wednesday pointed to the deepening confrontation between the Brotherhood and the military establishment, which has reasserted its role at the heart of government even as it says it aims to steer clear of politics.
Saying it moved against Mursi in response to the biggest popular protests in Egypt's history, the army installed an interim cabinet that plans to hold parliamentary elections in about six months, to be followed by a presidential vote.
The Brotherhood says it wants nothing to do with the transition plan. With Mursi still in military detention at an undisclosed location, there is slim hope for compromise.
The country remains deeply split over what happened on July 3. The Brotherhood accuses the army of ejecting a democratically elected leader in a long-planned coup, while its opponents say the army responded to the will of the people.
Sisi announced the nationwide rallies after a bomb attack on a police station in Mansoura, a city north of Cairo in which a policeman was killed. The government said it was a terrorist attack. The Brotherhood also condemned the bombing, accusing the establishment of seeking to frame it.
Since Mursi was deposed, hardline Islamist groups have also escalated a violent campaign against the state in the lawless Sinai Peninsula, with daily attacks on the police and army.
Two more soldiers were killed on Thursday in an attack on a checkpoint, security and medical sources told Reuters.
At the Brotherhood protest camp in front of a Cairo mosque, Mursi supporters said they expected the army to provoke violence to justify its crackdown.
"The army itself will strike. They will use thugs and the police," said Sarah Ahmad, a 24-year-old medical student.
Essam El-Erian, another senior Brotherhood politician, accused "the putschists" of trying to recreate a police state, telling a televised news conference: "This state will never return, and Egypt will not go backwards."
(Additional reporting by Tom Perry and Maggie Fick, Noah Browning, Tom Finn and Shadia Nasralla; Writing by Tom Perry and Matt Robinson; Editing by Peter Graff)