Five people were injured with rubber-bullet wounds, a photographer at the scene reported.

Much of the country has been in uproar since the military deposed civilian leader Aung San Suu Kyi in a coup on February 1, with hundreds of thousands of demonstrators taking to the streets to protest against the junta.

Authorities have arrested hundreds of people since the putsch, many of them civil servants who had been boycotting work as part of a civil disobedience campaign.

On Saturday, hundreds of police gathered at Yadanarbon shipyard in Mandalay, on the Irrawaddy river.

Their presence sparked fears among nearby residents that authorities would try to arrest workers for taking part in the anti-coup movement.

Banging pots and pans in what has become a signature gesture of defiance, protesters started yelling at the police to leave.

But police opened fire with rubber bullets and slingshot balls, dispersing the alarmed protesters and leaving at least five injured.

One woman received a head wound and emergency workers quickly administered first aid to her.

"Shooting is still ongoing. Some people are injured," the city's rescue service chairman told AFP.

A Facebook video streamed live by a resident on the scene appeared to carry non-stop sounds of gunshots.

"They are shooting cruelly," said the resident, who appeared to be taking shelter on a nearby construction site.

"We have to find a safer place."

An AFP reporter on the ground heard multiple gunshots.

Since the nationwide protests started two weeks ago, authorities in some cities have deployed tear gas, water cannon and rubber bullets against demonstrators.

There have been isolated incidents of live rounds in the capital Naypyidaw.

An anti-coup protester who was shot in the head during a February 9 demonstration in Naypyidaw died on Friday.