Thursday's gathering of up to 10,000 protesters was taking place near Yangon's Sule pagoda, a major shrine that has been the focus of anti-government protests in the city.
"The largely Buddhist population does revere their monks and they will not sit by idly while they are being beaten up"
Kraut, Hamburg, Germany
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Reports said the warning shots fired by police have caused panic among the demonstrators, sending many scrambling for cover.
Witnesses said most of the protesters were lay people and students, with just a handful of Buddhist monks joining the latest demonstration.
Previous anti-government protests have seen thousands of saffron-robed monks march through the streets of Yangon.
Speaking from close to the Sule pagoda, an eyewitness told Al Jazeera that tensions were high in the area with heavily-armed security forces closing in on the protesters.
"There are so many army people there that it looks pretty scary," the witness said.
She said the protesters have vowed to continue demonstrating against the military government, defying threats of further force after up to eight people were reported killed on Wednesday.
There has been few reports from other parts of the country, although previous days have seen protests in several towns and cities across Myanmar.
Thursday's gathering came after government security forces launched pre-dawn raids on at least two monasteries in city of Yangon, beating several monks and arresting more than 70.
Windows at the Ngwekyaryan monastery in eastern Yangon were shattered, with shards of glass, spent bullet casings and bloodstains littering the ground following the raid.
Unconfirmed reports said one monk had been killed overnight.
The opposition National League for Democracy, led by detained Nobel Peace laureate Aung San Suu Kyi, said that several of its senior members were arrested as well.
However, Aung San Suu Kyi herself is reportedly still being held under house arrest, despite rumours earlier in the week that she had been moved to Yangon's notorious Insein prison.
Wednesday's crackdown on protesters has drawn international condemnation, with demonstrations outside Myanmar's embassies around the world and calls for tougher sanctions against the country's leaders.
The violence has also raised fears of a repeat of the government's ruthless suppression of the last major pro-democracy uprising, in which an estimated 3,000 people died.
China under pressure
On Thursday China, which has been under pressure to use its influence over the Myanmar government, called for calm from all sides.
|International calls are growing for |
action against Myanmar's leaders [AFP]
"China hopes all parties can exercise restraint and properly handle the situation," Jiang Yu, spokeswoman for the foreign ministry said.
She said foreign media reports risked "exaggerating and hyping up" the situation.
China is Myanmar's biggest diplomatic ally and its major trading partner.
The government has admitted that one man was killed when police opened fire but dissidents outside Myanmar reported receiving news of up to eight deaths.
According to government statements on Wednesday's violence, police used "minimum force" when a crowd of protesters refused to disperse and tried to grab weapons from officers.
An estimated 100,000 people joined Wednesday's protests in Yangon - making it the largest turnout yet since the current wave of anti-government demonstrations began more than a month ago.
The protests, which were triggered by a sudden massive hike in the price of fuel, have become the biggest challenge to Myanmar's military rulers in almost two decades.