At least one person has been killed during violent protests in the Caribbean city of Colon over a new law allowing the sale of state-owned land in the duty-free zone next to the Panama Canal, authorities have said.

The victim, a boy reportedly aged nine or 10 years old, was shot once in the stomach and died at the Manuel Amadador Guerrero Hospital on Friday, emergency unit director Mariano Lopez said.

Lopez said that at least six other people were treated for gunshot wounds and several others for pellet wounds.

Clashes between protesters police erupted after the National Assembly approved legislation permitting the sale of land in the duty-free zone to private companies already leasing land there to handle the import and export of goods.

President Ricardo Martinelli signed the law hours later.

Protesters claimed selling the land would affect jobs and revenue that the Colon free trade zone provides.

They said the government should instead raise the rent and invest the money in Colon, a poor and often violent city.

Anti-riot police used tear gas and fired into the air to disperse hundreds of people who burned tires and threw objects at police in Colon's downtown.

Local authorities instituted a 4pm curfew.

Three police officers were shot and five injured, a police spokeswoman said. She said the boy was shot in the chest with
bullets not used by the police.

'Small-minded interests'

The duty-free zone has about 2,000 companies that rent land and employ 30,000 people, according to authorities. The government estimates land sales could raise $2bn over the next 20 years.

Martinelli appealed for calm, saying in a TVN-2 television interview that the law would benefit the province of Colon.

He accused "agitators" of opposing it for political reasons and "small-minded interests".

Juan Carlos Navarro, leader of the opposition Democratic Revolutionary Party, said that the decision to sell the land was made "on a whim".

"There is no need at all to make Colon's people suffer in this manner," Navarro said.

Under the new law, 35 per cent of proceeds from land sales will go to a trust run by Colon authorities to make social investments while the rest will go into the national treasury coffers.