APPO has rejected the ultimatum.
This is from:
http://www.eluniversal.com.mx/notas/384257.html
I'll just post a translated excerpt of the first three paragraphs:
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APPO rejects ultimatum of the federal government
6:07 p.m. The leadership of the Popular Assembly of the Peoples of Oaxaca (APPO) determined this afternoon not to handover the city of Oaxaca to the federal government, but said it was disposed to establish a negotiating table with the Governmental Secretariat [i.e. Interior Ministry]
The APPO spokesman, Florentino Lopez, informed everyone, moreover, that the organization "repudiates the entrance of the Federal Preventive Police." He added that a resolution of the leadership of the Popular Assembly of the Peoples of Oaxaca does not permit the entrance of federal forces.
Moreover, they summoned the people to take to the streets and to fortify the barricades, mainly making a call to their sympathizers to fortify the squads in the streets which give access to the center of the city and to the university area of the city, where Radio Universidad is found, from whence information from APPO is spread. . . .
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So now we're going to wait to see what the Governmental Secretariat (Segob) says in response. If they say "no deal" then we'll know the federales mean business. But I suspect they'll respond favorably to the offer to talk.