TUNIS, July 26 (Reuters) - Tunisia is facing its worst crisis in a decade of democracy on Monday after President Kais Saied ousted the government and suspended parliament with help from the army, a move denounced as a coup by the country"s main parties, including Islamists. Saied"s action followed months of deadlock and disputes pitting him against Prime Minister Hichem Mechichi and a fragmented parliament, as Tunisia descended into an economic crisis exacerbated by one of Africa"s worst COVID-19 outbreaks. The crisis morphed into heated street confrontations as Saied"s critics, including Islamists, warned he was endangering the democratic system introduced after the 2011 Arab Spring uprising. Saied invoked emergency powers under the constitution late on Sunday to dismiss Mechichi and suspend parliament for 30 days. After the parliament speaker called for protests against the ousting, Saied extended existing COVID-19 restrictions on movement on Monday and vowed any violent opposition will be met with force. He has rejected accusations of a coup. The president also urged people not to go into the streets. "I call on the Tunisian people to stay calm and not respond to provocations," he said. The White House said it had not yet determined whether Saied"s actions constituted a coup. However, the U.S. State Department warned Tunisia not to "squander its democratic gains." FEUDING SIDES TAKE TO STREETS Rival groups faced off outside the parliament building on Monday, pelting each other with stones and hurling insults, but the size of the protests was limited to hundreds, and there were no major reported incidents of violence. The military surrounded the parliament and government palace, stopping members of parliament and state workers from entering the buildings, as well as the national television station. Al-Jazeera said police raided its Tunis bureau and expelled staff. President Saied also reinforced a long existing rule that bans public gatherings of three or more people in streets or squares. Saied"s intervention followed protests in major cities on Sunday over the government"s handling of the pandemic, with a spike in cases, and economy. Large crowds quickly poured into the streets to support his moves, reflecting anger at the moderate Islamist Ennahda - the biggest party in parliament - and the government over political paralysis, economic stagnation and the pandemic response. The economy shrank 8% last year. Tunisia has one of the highest COVID-19 death rates in the region. On Monday, Tunisia"s hard-currency bonds tumbled. People react in the street after Tunisia"s president dismissed the government and froze parliament, in La Marsa, Tunisia, July 26, 2021 in this still image obtained from a social media video. Layli Foroudi/via REUTERS Supporters of Tunisia"s biggest political party, the moderate Islamist Ennahda, take cover from stones thrown at them by supporters of President Kais Saied, outside the parliament building in Tunis, Tunisia July 26, 2021. REUTERS/Zoubeir Souissi Supporters of Tunisia"s biggest political party, the moderate Islamist Ennahda, gather outside the parliament building in Tunis, Tunsia July 26, 2021. REUTERS/Zoubeir Souissi 1/7 Supporters of Tunisia"s biggest political party, the moderate Islamist Ennahda, take cover from stones thrown at them by supporters of President Kais Saied, outside the parliament building in Tunis, Tunisia July 26, 2021. REUTERS/Zoubeir Souissi Parliament Speaker Rached Ghannouchi, the head of Ennahda, which has played a role in successive coalition governments, condemned it as an assault on democracy and urged Tunisians to take to the streets in opposition. "Kais Saied is dragging the country into catastrophe," he told Turkish television. Mechichi, who is at his home and not under arrest, a source close to him said, said in a statement he would not be a "disruptive element" and was ready to hand over power to whomever Saied appointed. Saied, who has not said when he will appoint a new premier or relinquish emergency powers, has also ordered that state administrations and foreign institutions stop work for two days. "NEW SISI" Though it has failed to deliver prosperity or good governance, Tunisia"s democratic experiment since 2011 has stood in stark contrast to the fate of other countries where Arab Spring revolts ended in bloody crackdowns and civil war. Outside parliament, supporters of Saied and Ennahda hurled insults and bottles at each other. A young Saied supporter who gave his name as Ayman said he was opposed to Ennahda - a party once close to the Muslim Brotherhood. "We are here to protect Tunisia. We have seen all the tragedies under the rule of the Muslim Brotherhood," he said, referring to the Islamist movement founded in Egypt in 1928 which inspired Sunni Islamists across the Arab world. Imed Ayadi, an Ennahda member, likened Saied to Egyptian President Abdel-Fattah al-Sisi, who deposed the Brotherhood"s elected former President Mohamed Mursi and banned the group in 2013. In recent years, Ennahda has sought to distance itself from the Brotherhood. "Saied is a new Sisi who wants to collect all authority for himself ...We will stand up to the coup against the revolution," Ayadi said. Saied has framed his actions as a constitutional and popular response to years of economic and political paralysis, and said Article 80 of the constitution gave him power to dismiss the government, appoint a temporary administration, freeze parliament and lift the immunity of its members. Ennahda and the other major parties disputed his interpretation of the rules and Ghannouchi has denied being consulted. Two of the other main parties in parliament, Heart of Tunisia and Karama, joined Ennahda in accusing Saied of a coup. Regional allies of Ennahda, including Turkey, decried Saied"s moves as a coup.