Armored troop carriers also moved into the roads around the palace, in what Egypt's state news agency said was a measure to secure the palace. The area had become a chaotic battleground between Mursi's Islamist backers and their opponents.
The soldiers' badges identified them as members of the Presidential Guard and Republican Guard, whose duties include guarding the presidency. At least five tanks and nine armored personnel carriers were seen near or around the palace.
The health ministry said five people had been killed and 350 wounded in bloodshed that has exacerbated the worst crisis since Mursi took office as Egypt's first president since a popular uprising overthrew Hosni Mubarak in February, 2011.
The military played a crucial role in ending Mubarak's 30-year rule by taking over from him to manage a transitional period, but it has stayed out of the latest crisis.
Mursi's opponents accuse him of seeking to create a new autocracy by awarding himself extraordinary powers in a decree on Nov. 22 and were further angered when an Islamist-dominated assembly pushed through a draft constitution that opponents said did not properly represent the aspirations of the whole nation.
The president has defended his decree as necessary to prevent courts still full of judges appointed by Mubarak from derailing a constitution vital for Egypt's political transition.
Around the palace, traffic was moving through streets strewn with rocks thrown during violence in which petrol bombs and guns were also used. Hundreds of Mursi supporters were still in the area, many wrapped in blankets and some reading the Koran.
"We came here to support President Mursi and his decisions. He is the elected president of Egypt," said demonstrator Emad Abou Salem, 40. "He has legitimacy and nobody else does."Mutual accusations
An opposition group called for more protests at the palace later on Thursday, setting the stage for further confrontation.
Mursi's opponents say the Muslim Brotherhood, the group that propelled the president to power in a June election, is behind the violence. The Brotherhood says the opposition is to blame and that the five dead were all Mursi supporters. The United States, worried about the stability of an Arab state which has a peace deal with Israel and which receives $1.3 billion in US military aid, urged dialogue. Britain also called for restraint and an "inclusive" political process.
A presidential source said Mursi, silent in the last few days, was expected to make a statement later on Thursday.
Vice President Mahmoud Mekky proposed "personal ideas" for a negotiated way out on Wednesday, saying amendments to disputed articles in the constitution could be agreed with the opposition. A written agreement could then go to parliament, to be elected after a referendum on the constitution on Dec. 15.
"There must be consensus," he told a news conference in the presidential palace as fighting raged outside on Wednesday. But the opposition stuck by its demand for Mursi to cancel the Nov. 22 decree and postpone the referendum before any dialogue.
Protests spread to other cities, and offices of the Muslim Brotherhood's political party in Ismailia and Suez were torched.
But Mursi has shown no sign of buckling under pressure from protesters, confident that the Islamists, who have dominated both elections since Mubarak was overthrown, can win the referendum and parliamentary election to follow.
As well as relying on his Brotherhood power base, Mursi may also draw on a popular yearning for stability and economic revival after almost two years of political turmoil.
Opposition coordinator Mohamed ElBaradei said on Wednesday the street action and the polarization of society were pushing Egypt into violence and "could draw us to something worse".
The Egyptian pound plunged 4 percent on Thursday to its lowest level in eight years, after previously firming on hopes that a $4.8 billion IMF loan would stabilize the economy. The Egyptian stock market fell 4.4 percent after it opened.
CAIRO (Reuters) -- Egyptian army tanks deployed outside the presidential palace on Thursday in streets where supporters and opponents of President Mohamed Mursi had clashed into the early hours of the morning in violence that killed five people.