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Clinton meets with Egypt's military leader

ReutersEgyptian military chief Field Marshal Mohamed Hussein Tantawi welcomes U.S. Secretary of State Hillary Clinton to the Defense Ministry in Cairo on Sunday.

SAN FRANCISCO (MarketWatch) -- U.S. Secretary of State Hillary Clinton held talks Sunday with Egypt's top military leaders in Cairo on the second day of her swing through the newly democratic nation.

Clinton met with Field Marshal Hussein Tantawi, who heads the Supreme Council of the Armed Forces. The organization handled Egypt's affairs after former President Hosni Mubarak was ousted last year.

She spoke with Tantawi about the political transition, a U.S. economic loan package and the military's relationship with newly elected Egyptian President Mohammed Morsi, according to reports from al-Jazeera and BBC News, citing U.S. officials.

During her trip, Clinton has had to delicately handle a power struggle between Morsi and the army, which moved to limit power of the new civilian president just ahead of his election. Morsi's been fighting to regain those powers. Morsi is the first democratically elected president in Egypt's modern history.

Clinton told reporters Saturday she supports the idea of Egypt's army returning to a "purely national security role," according to a transcript of the news conference on the State Department website.

She said the U.S. is ready to make available $250 million in loan guarantees to small-and-medium-sizes businesses in Egypt. In September, a "high-level" delegation of American businesses will tour the country to explore new investment and trade opportunities. Clinton further said a U.S.-Egypt Enterprise Fund will be launched with $60 million.