Egyptian President Hosni Mubarak tried to buy time in the face of defiant street protests, pledging to raise public sector wages by 15% and ordering a probe into recent deadly violence.
The 82-year-old leader met his new-look cabinet for the first time on Monday as the regime battled to get the economy moving despite ongoing demonstrations by pro-democracy activists occupying a Cairo square since January 25.
According to the official MENA news agency, the cabinet approved a plan to increase state sector salaries by 15% from April and to spend another 6.5 billion Egyptian pounds ($940 million) boosting pensions.
Mubarak also pledged to launch an "independent" investigation into deadly violence between his supporters and demonstrators Wednesday at Tahrir Square that left 11 dead and nearly 1,000 injured, according to official estimates.
The president "has given instructions for the creation of a... transparent, independent and impartial investigatory commission," MENA reported.
The commission will investigate "the terrible and unacceptable violations that made some protesters innocent victims", it said.
The pay hike might reassure Mubarak's partisans in Egypt's large bureaucracy and security forces, but there was no sign that the demonstrators were ready to cede ground.
Campaigners sat under the tracks of army tanks deployed around the square. Activists also kept up the pressure by barring access to the Mugamma, the heart of Egypt's bureaucracy, which dominates the 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 that "will uphold the treaties and obligations" by which Cairo is presently bound, US President Barack Obama's spokesman Robert Gibbs said.
Egypt has played a key role in the Middle East peace process, becoming the first Arab country to officially recognise Israel with a peace treaty signed in 1979.
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) until 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.
On Sunday, Vice President Omar Suleiman -- Mubarak's key lieutenant and possible successor -- tried to appease demonstrators by inviting several opposition groups to join him on a panel to pilot democratic reform.
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.
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.
German magazine Der Spiegel reported Monday that preparations were under way for Mubarak to possibly visit Germany for an "extended medical check-up".
"Preliminary talks with appropriate hospitals are ongoing," it said. AFP was unable to confirm the report.
While Mubarak has said he is "fed up" with leadership, he has said he must stay on until September's presidential election in order to ensure stability -- but the demonstrators' frustration is now finding an echo abroad.
Spain's foreign minister said the election should be brought forward, but US Secretary of State Hillary Clinton warned that an early election could lead to complications if opposition groups are not organised for the vote.