Wed Sep 26, 12:50 AM ET

YANGON, Myanmar - Myanmar's military leaders imposed a nighttime curfew and banned gatherings of more than five people Tuesday after 35,000 Buddhist monks and their supporters defied the junta's warnings and staged another day of anti-government protests.

The country's hard-line military rulers have not used force so far to stop the biggest anti-government demonstrations in nearly two decades, led by the monks. But soldiers in full battle gear were deployed in the country's largest city of Yangon, setting the stage for a showdown with a determined pro-democracy protest movement.

In Myanmar's second largest city of Mandalay, more than 100 soldiers armed with assault rifles deployed around the Mahamuni Paya Pagoda on Wednesday, erecting a barricade and barbed wire at the entrance through which protesting monks had marched out to protest.

"We are so afraid; the soldiers are ready to fire on civilians at any time," a man near the pagoda said, speaking on condition of anonymity for fear of reprisals.

If protesters defy the restrictions and the military responds with force, it could further alienate already isolated Myanmar from the international community. It would almost certainly put pressure on Myanmar's top economic and diplomatic supporter, China, which is keen to burnish its international image before next year's Olympics in Beijing.

If monks who are leading the protests are mistreated, that could outrage the predominantly Buddhist country, where clerics are revered. But if the junta backs down, it risks appearing weak and emboldening protesters, which could escalate the tension.

When faced with a similar crisis in 1988, the government harshly put down a student-led democracy uprising. Security forces fired into crowds of peaceful demonstrators and killed thousands, traumatizing the nation.

Authorities announced the ban on gatherings and a 9 p.m. to 5 a.m. curfew through loudspeakers on vehicles cruising the streets of Yangon and Mandalay. The announcement said the measures would be in effect for 60 days.

A comedian famed for his anti-government jibes became the first well-known activist rounded up after the curfew was imposed.

Zarganar, who uses only one name, was taken away from his home by authorities shortly after midnight, with family members saying authorities told them the 45-year-old had been "called in for temporary questioning."

Zarganar, along with actor Kyaw Thu and poet Aung Way, led a committee that provided food and other necessities to the Buddhist monks who have spearheaded the protests. He earlier had been imprisoned twice and his comedy routines were banned for their satirical jokes about the regime.

The fates of the actor and poet were not immediately known.

Earlier Tuesday, the army began deploying troops in the heart of Yangon after tens of thousands of people led by barefoot monks in maroon robes defied orders to stay off the streets and marched for the eighth straight day against the junta.

The potential for a violent crackdown already had aroused international concern, with pleas for the junta to deal peacefully with the situation coming from government and religious leaders worldwide. They included the Dalai Lama and South Africa's Archbishop Desmond Tutu, both Nobel Peace Prize laureates like detained Myanmar opposition leader Aung San Suu Kyi.

President Bush announced new U.S. sanctions against Myanmar, formerly known as Burma, accusing the military dictatorship of imposing "a 19-year reign of fear" that denies basic freedoms of speech, assembly and worship.

"Americans are outraged by the situation in Burma," Bush said in an address to the U.N. General Assembly in New York.

Bush said the U.S. would tighten economic sanctions on leaders of the regime and their financial backers, and impose an expanded visa ban on those responsible for human rights violations and their families.

The European Union also threatened to strengthen existing sanctions against the regime if it uses violence to put down the demonstrations.

The protests could bring increased scrutiny on China's close relations with Myanmar. China is the country's major trading partner and Chinese energy companies are investing in exploration of natural gas in Myanmar.

Myanmar has about 19 trillion cubic feet of proven natural gas reserves, only about 0.3 percent of the world's total reserves, according to BP's Statistical Review of World Energy at the end of 2006. Although it doesn't currently export gas to China, its supply could potentially help feed a rapidly growing Chinese economy hungry for energy.

Myanmar's imposition of new restrictions after a week of relative inaction by the military government throws down a challenge to its opponents, testing their mettle when faced with almost certain arrest.

It was not clear what the penalty for defying the curfew would be. But breaking the section of the law restricting gatherings carries a possible jail term of two years.

The new restrictions were announced late at night, and many residents did not seem aware of them.

The current protests began Aug. 19 after the government hiked fuel prices in one of Asia's poorest countries. But they are based in deep-rooted dissatisfaction with the repressive military rule that has gripped the country since 1962.

The protests were faltering when the monks took the lead last week, assuming the role of a moral conscience they played in previous struggles against British colonialism and military dictators.

At least 35,000 Buddhist monks and sympathizers defied official warnings Tuesday and staged another anti-government march.

"The protest is not merely for the well-being of people but also for monks struggling for democracy and for people to have an opportunity to determine their own future," one monk told The Associated Press. "People do not tolerate the military government any longer." He spoke on condition of anonymity for fear of official reprisals.

On Monday, a massive monk-led protest drew as many as 100,000 people in Yangon — the biggest street protest since the failed 1988 uprising.

The head of the country's official Buddhist organization, or Sangha, issued a directive Monday ordering monks to stick to learning and propagating the faith, saying young monks were being "compelled by a group of destructive elements within and without to break the law," the state-run New Light of Myanmar newspaper said.