Twelve were in serious condition with bullet wounds and beating injuries, a doctor said, after police fired on thousands of demonstrators as protests neared the heavily defended king's palace in the heart of Kathmandu.

Opposition parties and Maoist rebels dismissed Gyanendra's promise of a return to multi-party democracy and said they would continue protests and demands for a new constitution to decide the monarchy's fate.

The monarch ordered a new curfew to run for eight hours from midday Saturday (0615 GMT) after protesters gathered on the outskirts of the city, burning tyres and throwing stones.

The protesters shouted "The king's address is a sham," "Leaders don't compromise with the king" and "We want complete democracy."

Tens of thousands then moved towards the centre where they were met by a wall of police who charged them with batons and tear gas, forcing them to turn tail leaving hundreds of shoes on the ground, an AFP reporter witnessed.

Many of the injured had head injuries, doctor Sarita Pandey of Kathmandu Model Hospital said.

The protests petered out after torrential rain hit the capital and witnesses reported thousands of demonstrators leaving the city centre.

Mobile phone services in the capital were cut as the rallies mounted, apparently to prevent protest organisers from communicating. So mobile phones failed to work in the capital from mid-afternoon. No officials from Nepal Telecom were available to comment but cutting off mobile phone service has been a popular regime tactic to hamper protests.

The opposition leaders also met with European diplomats, who urged them to consider the king's offer.

"The parties don't think he (king) has done enough, but we think it is basis on which we can build and move forward," British Ambassador Keith George Bloomfield said after the meeting.

Paule Mustonen, Charge d'Affaires of Finnish embassy, added, "We have explained to them that this would lead to a process that could help end the violence and lead to the beginning of democracy."

The demonstrations came hours after King Gyanendra's announcement late Friday asking Nepal's seven-party opposition to appoint a prime minister in an apparent climbdown after two weeks of mayhem against his absolute rule.

In his televised speech after tumultuous demonstrations in Kathmandu and sustained international pressure, the king called for "a meaningful exercise in democracy" with elections "as soon as possible".

But the opposition rejected the offer and vowed to continue protests on the 17th day of strikes and demonstrations against the king who seized power in February last year.

"The king in his royal proclamation has failed to address the issues of the seven-party alliance's roadmap and the understanding reached with the Maoists," the parties said in a joint statement.

"There is no way we can join the government and our general strike and peaceful protest will continue."

The alliance wants a constituent assembly to decide the future of the monarch, who sacked the government 14 months ago saying it was corrupt and had failed to stem a bloody Maoist revolt.

The Maoists, who have fought a 10-year insurgency that has left some 12,500 dead, said the "so-called royal address" by the king was meaningless.

In a statement, their leader said they would continue to oppose the king, who held out no olive branch to the Maoists in his speech. They are seen as key to any settlement as they control swathes of the country.

The Maoists and their former foes from the opposition parties struck a loose alliance in November to oust the Hindu monarch, who is believed by many in Nepal to be a reincarnation of Lord Vishnu, the protector.

Gyanendra's announcement drew cautious praise from the international community, with the United States, the United Nations, Britain and India welcoming the move as a first step on the path to democracy.

The alliance of opposition parties launched a nationwide general strike on April 6 to force the king to relinquish absolute power.

Gyanendra responded with a security clampdown, which left more than a dozen dead, hundreds wounded and even more under arrest.

The king had reiterated an offer of general elections, without fixing a date, in a Nepalese New Year address April 14.

But the alliance refused to back down, and with the popular movement strengthening, called Thursday for the strike to be intensified.

Hundreds of thousands of people responded, pouring into the outskirts of Kathmandu on Thursday and again Friday despite a curfew and shoot-on-sight orders.