Nepali army mulls tough action against rebels

Security forces should not "harbour any illusions about ... having unlimited powers during the state of emergency," said army chief of staff General Pyar Jung Thapa said in the state-run newspaper Rising Nepal.

At the same time, Thapa warned the army would pursue "a more vigorous offensive" ... if the Maoists neglect the (talks') call of His Majesty."

Gyanendra fired the government Tuesday for failing to hold elections and quell the insurgency by Maoists, who want to topple the monarchy and install a communist republic, and named a loyalist cabinet under his "chairmanship."

He has pledged to restore multi-party democracy in three years.

Apart from heavy security, there was no sign of the political crisis in Kathmandu. The ancient capital's winding streets were jammed with traffic and schools, shops and businesses were open.

There has been no rebel response to the king's call for talks but after he seized power, Maoist leader Prachanda denounced him as a "national betrayer" and called for a broad political front with those opposing "feudal autocracy."