CAIRO (Reuters) - The chances for a negotiated end to Egypt's political crisis looked to have hit the rocks on Tuesday with the army-installed government reportedly ready to declare that foreign mediation efforts had failed. State-run Al-Ahram newspaper, citing official sources, said the government would make an announcement to that effect soon. It would also declare that Muslim Brotherhood protests against the army's overthrow of President Mohamed Mursi were non-peaceful - a signal that the government intends to end them by force. The report appeared hours after two senior U.S. senators on a mediation mission said they considered Mursi's removal to have been a military coup - causing an uproar in the Egyptian media and drawing a strong riposte from the acting president. The Republican senators - Lindsey Graham and John McCain - also called on the military to release political prisoners and start a national dialogue to return Egypt to democratic rule. State television cited acting President Adly Mansour as calling McCain's comments "an unacceptable interference in internal policies." Many Egyptian private TV stations' talk shows also reacted furiously. Lamis al-Hadid of CBC TV called them a "big insult to Egypt and its people." At least one person was killed and 35 were injured in clashes between Mursi's supporters and opponents in the northern port city of Alexandria late on Tuesday, a security source said. But the al-Ahram report dashed hopes of a breakthrough, with the government casting the blame on what it called the intransigence of Mursi's Muslim Brotherhood. The newspaper said the interim government would announce "the failure of all U.S., European, Qatari and UAE delegations in convincing the Brotherhood of a peaceful solution to the current crisis." Asked to comment on the newspaper report, a senior U.S. State Department official in Washington said, without confirming that the talks had broken down: "We are still committed to our ongoing efforts at calming tensions, preventing violence and moving toward an inclusive political process." The interim Egyptian government's announcement would set the stage for a showdown with pro-Mursi protesters camped out at Rabaa and al-Nahda in Cairo, saying they were non-peaceful gatherings. The security forces last week promised the protesters safe exit if they left the camps, but warned their patience was limited. The latest developments made for a remarkable end to Graham and McCain's mission, undertaken at U.S. President Barack Obama's request to help resolve the crisis in a country that is instrumental in Washington's Middle East policy. After meeting army chief General Abdel Fattah al-Sisi, interim Vice President Mohamed ElBaradei and interim Prime Minister Hazem el-Beblawi, Graham told a news conference: "The people who are in charge were not elected. The status quo is not acceptable. They had also appealed to the Brotherhood, many of whose leaders have been jailed, including Mursi, to avoid resorting to violence and to join the dialogue. But it was the description of Mursi's overthrow as a coup that hit a raw Egyptian nerve. The definition is hotly disputed by the rival sides, with the military and its civilian supporters saying it was acting at the behest of millions of Egyptians who had taken to the streets to demand Mursi leave office. The word coup, which U.S. officials had studiously avoided, could under U.S. law trigger a cutoff of the $1.3 billion U.S. military aid Egypt receives each year. However McCain did say that "cutting off aid would be the wrong signal at the wrong time." A spokesman for the interim government, Sherief Shawki, told Reuters it would stick by its transition plan. Fears he was trying to establish an Islamist autocracy, coupled with a failure to ease economic hardships afflicting most of Egypt's 84 million people, led to mass street demonstrations, triggering the army move. On Monday, U.S. Deputy Secretary of State William Burns and European Union envoy Bernardino Leon met jailed Brotherhood deputy leader Khairat El-Shater in the prison where he is held.