Kazakh President Kassym-Jomart Tokayev accepted the government's resignation on Wednesday after a fuel price increase in the oil-producing Central Asian country triggered protests in which nearly 100 police were injured.
Police used tear gas and stun grenades late on Tuesday to drive hundreds of protesters out of the main square in Almaty, the former Soviet republic's biggest city.
Clashes resumed on Wednesday after the Cabinet resigned. A Reuters correspondent saw thousands of protesters pressing ahead towards Almaty city centre, some of them on a large truck, after security forces failed to disperse them with tear gas and flashbang grenades.
Atameken, Kazakhstan's business lobby group, said its members were reporting cases of attacks on banks, stores and restaurants.
Kazakhstan is a tightly controlled country which cultivates an image of political stability, helping it attract hundreds of billions of dollars of foreign investment in its oil and metals industries over three decades of independence.
Demonstrators try to block a police bus during a protest in Almaty, Kazakhstan on January 4, 2022.
City authorities urged residents to stay home, saying that the law enforcement operation was continuing.
The protests began after the government lifted price controls on liquefied petroleum gas at the start of the year.
Many Kazakhs have converted their cars to run on LPG because of its low cost.
Speaking to acting cabinet members, Tokayev ordered them and provincial governors to reinstate price controls on LPG, and broaden them to gasoline, diesel and other "socially important" consumer goods.
He also ordered the government to develop a personal bankruptcy law and consider freezing utilities' prices and subsidizing rent payments for poor families.
He said the situation was improving in protest-hit cities and towns, including Almaty and the surrounding province, where the authorities declared a state of emergency with a curfew and movement restrictions.
In addition to replacing the prime minister, Tokayev also appointed a new first deputy head of the National Security Committee who replaced Samat Abish, a nephew of powerful ex-president Nursultan Nazarbayev.
Nazarbayev, 81, a Soviet-era Communist Party boss, ran Kazakhstan for almost 30 years before resigning abruptly in 2019 and backing Tokayev as successor. Nazarbayev retains sweeping powers as the chairman of the security council; he has not convened the council or commented on this week's violence.
The protests began in the oil-producing western province of Mangistau on Sunday, after LPG prices more than doubled following the lifting of caps.
A source familiar with the situation said some workers at Mangistaumunaigas, a Kazakh-Chinese oil-producing joint venture based in the Mangistau province, were on strike, although this was not affecting output so far.
Tokayev declared the emergency in Almaty and Mangistau and has said that domestic and foreign provocateurs were behind the violence.
Separately, the interior ministry said that in addition to Almaty, government buildings were attacked in the southern cities of Shymkent and Taraz overnight, with 95 police officers wounded in clashes. Police have detained more than 200 people.
Almaty mayor Bakytzhan Sagintayev said in an address to residents that the situation in the city was under control and security forces were detaining "provocateurs and extremists."
Dollar-denominated bonds issued by Kazakhstan came under pressure as traders reacted to the unrest. The 2045 bond fell nearly 1 cent in early trade to 141.24 cents in the dollar, its lowest level in three months, Refinitiv data showed.