The Administrative Court's ruling deepened Egypt's political uncertainty at a time of social unrest and economic crisis, with the nation's foreign currency reserves at critically low levels and the budget deficit soaring.

The court said it had referred Egypt's amended electoral law, under which the lower house polls are due to be held, to the Supreme Constitutional Court for review.

Egypt has been torn by political confusion and strife since the 2011 uprising that deposed autocrat Hosni Mubarak. Many opposition parties had announced they would boycott the vote, which had been due to be held in four stages from April 22 until late June.

Mursi's office said that it respected the court's decision, which was handed down as the government says it wants to resume talks with the International Monetary Fund (IMF) on a $4.8 billion loan to shore up Egypt's finances.

"It is now likely that elections will be postponed, extending political uncertainties and further delaying a possible IMF deal at a time when restoring confidence in the economy is needed to avert a potential economic crisis," said Farouk Soussa, chief economist at Citi in Dubai.

"Egypt's economic challenges are deepening by the day, while the prospects of addressing these seemingly diminish at an equally alarming rate," he said.

The IMF is unlikely to want to grant a loan while there remains significant upheaval and lack of any form of political consensus, said Jason Tuvey, Assistant Economist at Capital Economics in London.

"This uncertainty will further weigh on the Egyptian economy, which is already very weak, and possibly lead to further capital flight and greater pressure on the pound."

TECHNICAL GROUNDS

A statement issued by Mursi's office said the presidency respected the court's decision, adding that it was thereby "upholding the value of the rule of law and the constitution and implementing the principle of the separation of powers".

Earlier Mohamed Gadallah, Mursi's legal adviser, had made the same point but said the presidency would nevertheless appeal the ruling. However, the presidency said on Twitter that an appeal was "unlikely".

The court made its ruling on technical grounds, saying in a statement that the Shura Council, Egypt's upper house of parliament, had not returned the amended electoral law to the Supreme Constitutional Court for final review before passing it.

Gadallah said the presidency was not in conflict with the judiciary and that Shura Council should have resubmitted the law to the constitutional court for final review.

Egyptian courts have made a number of rulings that have gone against Mursi and his ruling Muslim Brotherhood. The previous Islamist-dominated lower house was dissolved by a court ruling that struck down the original electoral law under which the chamber had been elected.

Violence frequently has flared in Egyptian cities, notably late last year over a decree in which Mursi temporarily gave himself sweeping powers. Youths fought police in the Suez Canal city of Port Said for a fourth day on Wednesday.

Political science professor Mustapha al-Sayyid said a delay to the elections was likely as the case bounced between different courts.

"Of course the government will appeal but eventually, judging by previous experience, the higher court will rule to postpone the vote until the Constitutional Court sees the amended electoral law, which should have happened in the first place," he said.

Mursi called the elections on Feb. 21. He has already changed the starting date to avoid making members of the Christian minority vote during their Easter festival.

Opposition politician Amr Hamzawy welcomed the court's decision. "Again, the judiciary has stopped the Muslim Brotherhood from making a mess of the rule of law and legislation," he told Reuters.

"Referring the law back to the Supreme Constitutional Court is a new lesson to the Muslim Brotherhood."

Copyright Reuters, 2013