Bahraini police fired teargas and stun grenades to stop mainly Shi'ite protesters trying to march towards the roundabout at the centre of a failed pro-democracy uprising last year and detained two American rights activists who came to monitor.
The activists had come as part of a group called Witness Bahrain which says it wants to observe events on the eve of the first anniversary of protests led mainly by the Shi'ite majority for democratic reforms in the Gulf Arab state.
An official said they would be deported for giving false information about the nature of their visit on entering Bahrain.
Bahraini forces crushed the movement, with help from Saudi Arabia and other Gulf states, but escaped heavy censure from the United States, which shares Saudi fears that empowering Shi'ites in Bahrain would expand Shi'ite Iran's influence in the Gulf.
The U.S. Fifth Fleet is based in the island kingdom.
Groups of several hundred activists gathered at different points around Manama's old market district in an apparent effort to evade riot police, before suddenly marching towards the roundabout, now renamed al-Farouq Junction.
To the roundabout, to the roundabout, chanted protesters, led by prominent rights activist Nabil Rajab. Behind them, police using megaphones warned the crowd that the march was unauthorised and they should disperse. Police then fired teargas and stun grenades at the march.
Riot police seized the two Americans, Huwaida Arraf and Radhika Sainath, part of a team of activists calling themselves Witness Bahrain who are monitoring protests this week.
Police broke up a crowd of women protesters in an altercation over the arrest of the women activists, after police officers cornered Rajab in an effort to stop the march in a busy commercial district.
In the coming days and weeks, Witness Bahrain will stand with people taking to the streets to demand democracy, equality and respect for human rights, the group said in a statement.
Witness Bahrain will also maintain a presence in villages active in pro-democracy protests which are being subjected to night raids, teargassing and other attacks by the police.
Some rights activists were denied entry to Bahrain last month. Egypt's military rulers have began legal action against Americans and Egyptians for activities with non-government organisations that they say was not legal or authorised.
Rajab said after police left that the protests would continue. This proves to everybody that peoples' spirit is still alive and coming back, and we're not going to go away, he told Reuters.
Demonstrations, sometimes organised by leading Shi'ite opposition party Wefaq with government approval, have grown in number and frequency as the February 14 anniversary of the uprising approaches.
But youth protesters in Shi'ite villages have also clashed with security forces, throwing petrol bombs and iron bars and blocking roads with burning tyres.
Activists say at least two people have died in police custody in the past month and others have died from apparent effects of teargas, taking the total dead since February 14, 2011 to over 60. The government disputes the causes of death.
Bahrain's Sunni rulers have given parliament some more powers of scrutiny over ministers and budgets, but are resisting opposition demands that the elected parliament be given the power to approve cabinet appointments.
Sunnis who had gathered at the al-Fateh mosque for a rally led by pro-government cleric Sheikh Abdul-Latif Al Mahmood said they were worried the Al Khalifa family-led government would give in to Wefaq's demands for parliament to form the cabinet.
They said Shi'ites were using violence for political gain.
We want to send a message to the government that we are against the terrorism and the government should listen to us as well, said a housewife who gave her name as Nour.
We are afraid. Bahrain was a land of peace, where we didn't lock our doors at night and women would go out without fear of anybody, said Hala Ahmed, a doctor.
They said Sunnis were moving out of some districts because of the continuing clashes between police and youths.
Asked if he could agree with the opposition demand for a Western-style parliamentary democracy, Nader Mohamed said: In the long run, yes, why not? But no in the current situation.
(Reporting by Andrew Hammond; Writing by Mahmoud Habboush and Andrew Hammond; Editing by Myra MacDonald)