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The protesters were angry about the introduction of a new interim authority set to take charge of the region on Friday, which they said would give power to armed groups and would not benefit local people.
The Malian government did not immediately respond to requests for comment.
A year ago the government signed a peace deal with Tuareg-led rebels aimed at ending a long conflict that has destabilised the desert country and made it a base for violent jihad. There are signs the pact is unravelling.
The government and the rebel alliance – Coordination of Azawad Movements (CMA) – accuse each other of stalling on implementation and the rebels complain that the U.N.-backed deal falls short of their demands.
Thousands of protesters gathered in the streets of Gao, marching to the central police station and surrounding it on Tuesday. Many young people had knives, a Reuters witness said.
Protesters set fire to tyres, filling the air with acrid smoke, and pelted the police with stones. Security forces attempted to disperse the crowd with tear gas then the military opened fire, killing three people and wounding dozens.
“Look, I was shot in my arm and foot,” said a man running away from the crowd, nursing bleeding wounds.
Shooting had stopped and much of the crowd had been dispersed by 11 a.m. (1100 GMT), but a heavy military presence continued to patrol the streets.