NAIROBI - Kenyan police fired teargas to disperse stone-throwing youths at a funeral on Wednesday held by the opposition for slum residents killed in a crackdown on protests against President Mwai Kibaki's disputed election.

Several teargas canisters landed in the large football field in Nairobi where coffins were laid out and opposition leader Raila Odinga was winding up his oration.

"This is a war between the people of Kenya and a small clique of very blood-thirsty people who want to cling on to power at all costs," Odinga told the crowd of mourners as violence was erupting on a road outside.

"Let us stand as one people to liberate our country."

The latest trouble came as former U.N. chief Kofi Annan was to begin talks with Kibaki and Odinga to resolve a bloody stalemate that threatens to wreck the east African nation's image as a stable democracy and flourishing economy.

Adding to a death-toll of about 650 since the December 27 election, at least two more people were killed in a Nairobi slum during the morning in the latest ethnic clashes since the vote.

Odinga says Kibaki stole the narrow victory, which has split the country of 36 million down the middle.

Police had eased a ban on public demonstrations, in place since Kibaki's December 30 swearing-in prompted rioting and looting, to permit a memorial led by the Orange Democratic Movement (ODM) for what it called 28 "freedom fighters."

The day began peacefully as hundreds of supporters marched from near the Kibera slum, a stronghold of Odinga's Luo tribe, carrying coffins of people they say were shot by police there.

But the event turned violent when about a dozen youths on a major highway outside stopped some cars, smashed windows and beat occupants who did not belong to their Luo tribe.

Police moved in but held fire, witnesses said, as a growing crowd of youths threw rocks at them. They eventually responded with charges and fusillades of teargas, some of which landed in the field, terrifying mourners and scattering ODM leaders.

As police pulled back, firing more teargas from the back of trucks, the youths set upon a nearby post office, smashing windows, starting a fire and tearing a wall down. They also smashed a row of phone booths.

PROTESTS OFF

Earlier, opposition sources said ODM would call off protests planned for Thursday.

"Annan has told us he will request no more street protests while he is here, and I can tell you we will not be objecting to that," a senior Odinga aide told Reuters.

Annan, due to meet Kibaki and Odinga on Wednesday, met newly elected parliament Speaker Kenneth Marende, who said face-to-face discussion between the two Kenyan leaders "is going to be on the table."

World powers have called on Kibaki and Odinga to hold urgent talks after more than three weeks of unrest.

Underscoring the urgency of Annan's mission, two men were found dead - one stoned and one decapitated - in Nairobi's Kariobangi slum. Area police commander Paul Ruto said the fighting was between Luos and Kibaki's Kikuyu ethnic group.

"We carried out an operation and have arrested five people. We have found a panga (machete) with blood stains," Ruto said, next to a truck holding the body with its head nearly off.

At least eight others were reported killed in the city and the Rift Valley, local media said.

Odinga has demanded Kibaki stand down or face an election repeat, which some diplomats have cautioned against as having too much potential for further bloodshed.

But Odinga hinted he may accept the creation of a prime minister post for him. "We are ready to share power with him. He remains president and we take the position of prime minister," Odinga told Germany's ARD television.