KATHMANDU, June 2: Two years of political turmoil in Nepal came full circle Wednesday as the king reappointed the prime minister he had fired in 2002, when he declared elected leaders incompetent at running the troubled kingdom.

Under pressure by pro-democracy street protests and a rising Maoist insurgency seeking to topple the monarchy, King Gyanendra announced he was giving Sher Bahadur Deuba, the last elected premier, his job back.

But protesters returned to the streets Wednesday after two opposition parties refused to accept Deuba's appointment and demanded Gyanendra explicitly renounce any role other than as a ceremonial monarch.

A palace statement stopped short of saying Gyanendra regretted sacking the democratic government but said Deuba would be "invested with executive rights." Royal-appointed premiers in place since 2002 could only take decisions with the king's approval.

"My demand for reinstatement has been fulfilled," Deuba told reporters. "I am going to arrange for general elections with the cooperation of all political parties and will resume talks with the Maoists to maintain peace and security," Deuba said.

The royalist government had also called for renewed dialogue with the rebels, but to little avail. Opposition parties have demanded that elections, which the king wants by April, be held under a "neutral" government.

Analysts saw the reappointment as a way for Gyanendra to save face and at the same time quell the demonstrations which triggered the resignation on May 7 of the king's handpicked prime minister Surya Bahadur Thapa.

"The reappointment of Deuba shows the king wants to end the street protests and restart talks with the Maoists but without having to go down before the people and say he was wrong," political analyst Kapil Shrestha said.

But former prime minister Girija Prasad Koirala, head of the kingdom's largest party, the Nepali Congress, refused to call off protests. "We will continue our movement. The king made a statement appointing Deuba but he did not say he was returning power to the people," Koirala told reporters.

Some 15,000 supporters marched Wednesday chanting "Deuba is a stooge of the king," witnesses said. The People's Front, a small far-left party involved in the opposition protests, also said the king did not go far enough.

However, the communist party, which was the main opposition in the dissolved parliament, and the right-wing National Democratic Party both said they were ready to take part in Deuba's new government.

While Nepal's main parties were united in wanting a return to elected rule after the monarch's "regression," none had called explicitly for the reinstatement of Deuba, who had built enemies among Kathmandu's tightly knit but fractious political elite.

Koirala has a long rivalry with Deuba and expelled him from the Nepali Congress two years ago. Maoist rebels, who are fighting to end the monarchy and control much of the countryside, have exploited the power vacuum in Kathmandu to show their strength.

Most traffic was off the streets of Kathmandu Wednesday in a transport shutdown called by the rebels in a prelude to a three-day nationwide strike called by the guerrillas from June 10.

Gyanendra in October 2002 had declared Deuba "incompetent" at developing Nepal's fragile economy and at fighting the Maoist insurgency, which has claimed more than 9,500 lives since 1996.

But Deuba, who turns 58 this month and has been premier twice before, had built an unusually high-profile international standing for a leader from the landlocked nation of Mount Everest.

In May 2002, Deuba paid the first visit by a Nepalese premier to the White House, where President George W. Bush committed the United States to helping the kingdom fight the Maoists.

Gyanendra became king in June 2001 after his brother King Birendra and nine other members of the royal family were massacred at the palace by the drunken crown prince, Dipendra. -AFP