Israel's president races to reach judiciary accord before parliament vote

Protesters chained themselves outside Israel's parliament on Monday, as the country's president led a last minute bid for a compromise on Prime Minister Benjamin Netanyahu's contentious judicial overhaul ahead of a crucial vote in the Knesset.

Police used a water cannon to disperse demonstrators opposed to the judicial campaign by Netanyahu's nationalist-religious coalition that has plunged Israel into one of its worst crises in decades.

"We are in the midst of a national emergency," President Isaac Herzog said in a statement. "We are working around the clock, in every possible way, to find a solution. There is a possible basis for understanding but there are still gaps that require the sides to show responsibility."

With banks and businesses joining in the protest, pressure mounted on Netanyahu, who was released from hospital on Monday morning after a two-night stay during which he was fitted with a pacemaker.

The crisis has spread to the military, with protest leaders saying thousands of volunteer reservists would not report for duty if the government continues with the plans and former top brass warning that Israel's war-readiness could be at risk.

At least six people were arrested in the protests outside parliament which was due around midday (0900 GMT) to start an hours-long final vote on a bill limiting the Supreme Court's powers to overrule decisions made by governments and ministers.

It would be the first change written into law from a package critics fear aims to curb judicial independence, but which Netanyahu - who is on trial on corruption charges he denies - insists are needed for balance among branches of government.

Herzog on Sunday met Netanyahu in the hospital where he was treated in hope of closing the rifts between the religious-nationalist ruling coalition and opposition parties, which were convening at the Knesset to discuss their next steps.

Compromise talks continued on Monday even as lawmakers were debating the bill, which would amend a law enabling the Supreme Court to void decisions it deems "unreasonable".

Netanyahu is being urged by Washington on the one side to reach a consensus over any judicial reforms, while his hard-line coalition partners are pushing for legislation to go ahead with more judicial changes to follow.

Netanyahu's coalition has been determined to push back against what it describes as overreach by a Supreme Court that it says has become too politically interventionist.

Critics say Monday's amendment has been rushed through parliament and will open the door to abuses of power by removing one of the few effective checks on the executive's authority in a country without a formal written constitution.

The government announced its plans to change the judiciary in January soon after it was sworn in, setting off unprecedented street protests, stirring concern among allies abroad for Israel's democratic health and denting the economy.

The Shekel has weakened around 8% since.

Israel's two biggest banks, Leumi and Hapoalim, said they would allow workers to demonstrate on Monday without losing pay.

A forum of some 150 of Israel's largest companies went on strike and Azrieli and Big, two of Israel's largest malls, said stores in their shopping centres would remain closed.