Security had been tightened amid fears of a Maoist infiltration
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Hundreds of opposition activists have been arrested in the Nepalese capital ahead of a planned rally against the king.
Senior leaders are said to be among those detained as they gathered in Kathmandu for the demonstration, which had been banned.
At least 150 students were also arrested ahead of the planned protests.
Earlier this week, the government outlawed public gatherings in some parts of the capital for security reasons after Maoist rebels called off a ceasefire.
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Down with the king's repression!
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A seven-month peace process aimed at ending the long-running Maoist uprising broke down last week when the rebels broke off talks.
The government, appointed by the king, has outlawed gatherings of more than five people in Kathmandu in response to intelligence reports about planned infiltration by the rebels whom it now calls terrorists.
Opposition parties are angry at the king's assumption of executive powers after he sacked the elected government and dissolved parliament last year.
Protesters defiant
At least 1,000 people were arrested as a reported 3,000 protesters converged at a major city junction from several different directions. Large numbers of army and police had been deployed in the area.
The mainline parties planning the protest insist they had scaled it down in acknowledgement of the authorities' concerns over security - but have refused to stop protesting altogether.
Thousands protested against escalating violence last week
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"Long live democracy!" and "Down with the king's repression!" protesters shouted out as they were driven away by police.
The protesters want King Gyanendra to reinstate the dissolved parliament and form an all-party government including their own nominees.
Riot police baton-charged demonstrators who threw stones at them near the Bir Hospital as they detained Amik Sherchan, leader of the far-left People's Front party which is close to the Maoists, the AFP news agency reported.
Violence escalates
Earlier, upwards of 150 students were arrested at a college, student leaders said.
The National Students' Union (NSU) is the student wing of the centrist Nepali Congress - one of five mainstream parties that had been planning the rally.
"Police started rounding up students at the universities, taking more than 200 of them to unknown locations," Rajendra Kumar Rai, president of the All Nepal National Free Students' Union, was quoted as saying.
A home ministry spokesman said "some" have now been released.
There has been an upsurge in violence since the rebels announced an end to the ceasefire last week.
At least six rebels, security personnel and civilians have been killed in separate incidents over the past 24 hours across the country.