Dozens of people were killed during clashes in the Yemeni capital, a day after President Ali Abdullah Saleh returned following three months away saying he was "carrying the dove of peace."
As the death toll mounted, the United States repeated its call for an end to the violence and a transition towards democracy.
More than 40 people were killed on Saturday in battles that hit several neighborhoods across Sanaa, including Change Square, epicenter of anti-regime demonstrations, an activist from the protest organizing committee said.
He said hundreds of others had been wounded as the death toll spiraled to 173 people over the past week. State news agency Saba said 24 of Saleh's soldiers had also been killed.
"We slept and woke up to the non-stop sound of gunfire," one Sanaa resident told AFP as clashes between rival military units raged in the city center.
As gunfire echoed around the capital, hundreds of thousands of people set out on a march from Change Square, which itself came under renewed fire from the security forces.
Flames leapt from shops and homes along Sanaa's central business avenue, witnesses said.
An eerie calm finally prevailed in the late afternoon as the guns fell silent.
A dissident military spokesman said 11 of his division's troops were killed Saturday and 112 wounded when elite Republican Guard troops, commanded by President Ali Abdullah Saleh's son Ahmed, attacked a camp of the First Armored Brigade north of Change Square.
"The camp was targeted by 60 shells," said the spokesman.
Republican Guards have engaged in a week of clashes with dissident soldiers from the First Armored Brigade, headed by General Ali Mohsen al-Ahmar, who have protected anti-regime protesters camped out on Change Square.
Security forces have also been fighting supporters of dissident tribal chief Sheikh Sadiq al-Ahmar in Sanaa's northern Al-Hasaba district.
Saleh's troops killed at least 17 people in an attack just after midnight on Friday, shelling and firing on Change Square, which protesters first occupied in February.
"Seventeen people were killed and 55 others were wounded," said Mohammed al-Qabati, a medic at the field hospital there.
As well as civilians, the dead including some dissident soldiers, Qabati told AFP.
Snipers had also opened fire from buildings around the square, witnesses said.
But even after Republican Guards burned down tents there, tens of thousands of people have remained camped in the square.
In north Sanaa, residents said fighting continued between Saleh's troops and Sheikh Sadiq supporters in Al-Hasaba.
Saleh returned to Yemen on Friday, preaching peace, after a three-month absence in Saudi Arabia, where he was treated for wounds sustained in a 3 June bomb attack on his palace.
"I have returned home carrying the dove of peace and an olive branch, not holding any grudges or hatred towards anyone," state news agency Saba quoted Saleh as saying.
Saba said the president would make "an important speech to mark the 49th anniversary" of the September 26, 1962 revolution that saw Yemen proclaimed a republic, although no appearance has been officially announced.
Saleh, who has been in power since 1978, traditionally makes his speech on the eve of the anniversary.
Even as the 69-year-old president called for a ceasefire and talks, the United States on Friday urged him to step down, with the White House calling on him to begin a "full transfer of power".
On Saturday, the US State Department again called for an end to the conflict.
"We urge all parties to cease violence and exercise maximum restraint," State Department spokeswoman Victoria Nuland said.
"The Yemeni government must immediately address the democratic aspirations of its people."
Arab Gulf foreign ministers who condemned the violence and echoed the US calls urging Saleh to "immediately" sign a Gulf Cooperation Council transition plan that has been on the table for months.
They also called for "self-restraint, a complete and immediate ceasefire, and for forming a commission of inquiry in the latest events that have cost the lives of innocent Yemenis.
A senior Saudi official told AFP Saleh had returned from Riyadh to put his house "in order" and "prepare for elections."
Saleh will leave after this, the official added, without specifying whether he would leave Yemen altogether or only leave power.
But Yemeni analyst Abdulghani al-Iryani said he believed Saleh had returned to stay.
"He returned because he thinks that his military forces' situation on (the) ground has improved," said Iryani. "He came to impose a military solution."
He expressed concerns of a "full-scale war" that might erupt between forces loyal to Saleh and other dissident troops.
