Yemeni security forces opened fire on demonstrators and launched rocket-propelled grenades at an office building Monday as they cracked down on a protest in the flashpoint city of Taiz in the country's south. Three people were killed, witnesses and medics said.

The attacks came a day after protesters began a new sit-in on one of the city's main streets, and as tensions escalate across the country between embattled President Ali Abdullah Saleh and protesters seeking his ouster.

The security forces opened fire on demonstrators and turned water cannons and tear gas on them at dawn, witnesses said.

Field doctor Sadeq al-Shujah said three protesters were killed and dozens wounded, including six people in critical condition.

The security forces also chased protesters into side streets and buildings where they took cover. They launched rocket-propelled grenades on an office building where they believed protesters were hiding, said activist Nouh al-Wafi.

The explosion set the building on fire, but there were no reports of casualties there, al-Wafi said.

A protester, Ghazi al-Samai, said people barricaded themselves in small streets, using rocks and garbage bins to ward off security forces.

Yemen is reeling from nearly three months of protests demanding Saleh's ouster. In office for over three decades, Saleh has intensified his crackdown on the protests and refused a regional mediation offer.

More than 140 people have reportedly been killed in the government crackdown on the escalating protests.

The deal for Saleh to step down _ negotiated by the Gulf Cooperation Council _ appeared close to success a week ago. But the president backed away from it last weekend by saying he would have aides sign it rather than doing so himself. The resulting deadlock threatens to plunge the already unstable nation deeper into disorder.

Also Monday, protesters in the capital, Sanaa, rallied on the main square. Some called for a march on Saleh's palace, chanting: "No dialogue, the march is the last decision."

Organizers were considering the decision but feared a small protest could be easily quashed by the heavy security around the palace.

Some protesters came with their home telephone numbers written in red on their chests, an indication they were prepared to die in the protests and wanted to make it easier to have their bodies identified.