KATHMANDU: Police fired at anti-government protesters in Nepal yesterday, killing two, in violence that threatens to derail a peace process aimed at ending a decade of civil war.Ethnic Madhesi from the country's south, who are critical of a newly-passed interim constitution that brought Maoist rebels into the political mainstream, clashed with police, a interior ministry official said.

More than four dozen people were wounded, independent Kantipur FM radio said.

Local officials said police fired in self-defence after being attacked by rioters in the southeastern town of Lahan, the focus of ethnic protests against the peace deal.

Police said they opened fire after Madhesi protesters tried to storm a police station. One policeman was injured, they said.

"First, we fired in the air, even then the crowd remained uncontrolled," a senior police officer said.

"We had to open fire at the protesters after they tried to storm the police post."

A 12-hour curfew has been imposed on Lahan, officials said.

The Madhesi Peoples Rights Forum, which has organised the anti-government protests, says the peace deal offers little for people living in the southern plains of the Terai, which is impoverished Nepal's bread basket.

They want more jobs and funds from the central government.

People living in the plains have long complained of discrimination, saying they have been left out of development and policy-making decisions.

Protests have escalated in the past few months, including street demonstrations, general strikes and government buildings being vandalised.

The violence comes at a time when the peace process to end years of Maoist insurgency in Nepal is taking shape. The rebels entered mainstream politics by joining an interim parliament, and their fighters have begun to hand over weapons to UN arms monitors, leaving behind a decade of insurgency.

"The concerns of the people living in the Terai should be adequately addressed in the interim constitution," defence analyst Bishnu Raj Upreti said.

"Otherwise, there is a risk of a serious conflict between the people from the hills and the plains."

Lahan was the focus of weekend violence as Madhesi inhabitants torched government offices and buses after a Maoist activist shot dead a 16-year-old boy.

Nepal's multi-party government ordered a high-level probe into the weekend violence that also sparked a transport strike by bus owners protesting a lack of security for their vehicles, officials said.

Prime Minister Girija Prasad Koirala, leading politicians and former Maoist rebels held an emergency meeting yesterday and agreed to pay $14,000 (BD5,292) in compensation to the family of the boy.