The protesters, who are inspired by a spectacular success of their Arab compatriots in Tunisia, burned tires and hurled stones at police as groups gathered at different parts of the capital Cairo, Reuters reported.
The scenes were unprecedented in the country, one of the United States' closest Middle East allies, and follow the overthrow two weeks ago of long-serving Arab strongman, Tunisian leader Zine al-Abidine Ben Ali, in a popular uprising.
Egypt's stock market, shut Tuesday for a holiday, fell 6 percent Wednesday, the Egyptian pound hit a six-year low against the U.S. dollar and the cost of insuring Egyptian debt against default rose.
A former Arab League envoy to the United Nations says the Tunisian revolution is inspiring the Arab world, which is worn-out by various dictatorial regimes.
In an interview with Press TV, Clovis Maksoud said Tunisia's revolution “is one of the most inspiring events of the Arab world in the contemporary time.”
The revolution “is the prognosis by which many frustrated people in various countries -- suffering dictatorship, poverty, and marginalization, are now being empowered,” said the former ambassador to the United Nations.
Egyptian activists had called on people to rally again after a “Day of Wrath” Tuesday of anti-government demonstrations across Egypt in which three protesters and one policeman were killed.
Security forces arrested about 500 demonstrators over the two days, an Interior Ministry source said. Witnesses said officers, some in civilian clothes, hauled away people and bundled them into unmarked vans Wednesday.
Police fired shots into the air near the central Cairo court complex, witnesses said. In another area, they drove riot trucks into a crowd of about 3,000 people to force them to disperse.
Meanwhile President Hosni Mubarak's son, who is considered his successor, fled to Britain along with his family amid the widespread protests across the country, Akhbar al-Arab reported on Wednesday.
The plane with Jamal Mubarak, his wife and daughter on board left for London Tuesday from an airport in western Cairo, the U.S.-based Arabic website wrote.
Officials did not immediately confirm the report while a spokesman from the U.S. Embassy in Cairo categorically denied that Mubarak's fled Egypt.
A protester in the center of Cairo told Reuters: “The main tactic now is we turn up suddenly and quickly without a warning or an announcement. That way we gain ground.”
A frustrated security officer shouted: “We don't know where they'll turn up next.”
The coordinated anti-government protests were unlike anything witnessed in Egypt since Mubarak came to power in 1981 after president Anwar Sadat was assassinated by Islamists.
The demonstrators complain of poverty, unemployment, corruption and repression and, inspired by the Tunisian revolt, demand that Mubarak step down.
The United States said it still supported Mubarak although it also backed Egyptians right of assembly and free speech.
Egypt remains a “close and important ally” White House spokesman Robert Gibbs told reporters traveling with U.S. President Barack Obama.
Hundreds of demonstrators had gathered early Wednesday outside the morgue in Suez demanding the release of the body of one of the three people killed there.
“The government has killed my son,” the Suez protesters chanted outside the morgue. “Oh Habib, tell your master, your hands are soiled with our blood,” they said, referring to Interior Minister Habib al-Adli.
Hundreds of protesters also gathered outside Cairo's journalists' union, where the authorities allow regular protests. Police beat some with batons when they tried to break a cordon. Protesters on buildings threw stones at police below.
Facebook has been a key means of communication for protesters but Egyptians said the site was blocked Wednesday. Twitter confirmed its site was blocked Tuesday, although users could still access it via proxy sites.
Demands posted on Facebook included the resignation of Mubarak and Prime Minister Ahmed Nazif, the dissolution of parliament and formation of a national unity government.
The complaints echo those of fellow Arabs in Tunisia -- soaring food prices, a lack of jobs and authoritarian rule that usually crushes protests swiftly and with a heavy hand.
The prime minister said Wednesday the government was committed to allowing freedom of expression by legitimate means and said police in Tuesday's demonstrations had acted with restraint.
Egypt's population of 80 million is growing by 2 percent a year. About 60 percent of the population -- and 90 percent of the unemployed -- are under 30 years old. About 40 percent live on less than $2 a day, and a third are illiterate.
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