KARACHI, May 1 (Reuters) - Central Karachi resembled a city under siege on Tuesday as thousands of Pakistani police and paramilitary forces were deployed to prevent a banned pro-democracy rally.

By midday, around 25 people had been arrested after three small groups of activists from the Pakistan Muslim Party (PML) of ousted and exiled former premier Nawaz Sharif appeared near the famous colonial-era Empress Market chanting pro-Sharif slogans.

"About 50 police rushed at them and they were all taken away," one witness said of the first group of 10 arrests.

He said about 200 police armed with guns, teargas and batons had earlier forced shopkeepers and market stallholders to close their businesses, while a helicopter circled overhead.

The 16-party Alliance for the Restoration of Democracy (ARD), the target of mass arrests since last week, has vowed to defy a ban imposed by military ruler General Pervez Musharraf and rally to demand the army stand down and immediately restore civilian rule.

Karachi's normally bustling streets were quieter than usual, in part due to the May Day public holiday but also because large areas were barricaded with all access barred.

Witnesses in Karachi said the police operation amounted to an undeclared curfew, with all movement severely restricted.

A dusty Nishtar Park, the original rally venue, was completely sealed off with water tankers and buses blocking surrounding streets and hundreds of police standing ready.

Convoys of police trucks patrolled nearby, while in other parts of the city groups of armed security personnel were stationed at street corners and police mounted on horseback plodded down main thoroughfares.

Musharraf, who ousted former premier Nawaz Sharif in an October 1999 bloodless coup, on Monday told politicians to stay at home.

"Once we have said there will be no political activity, there will be no political activity," he told a convention in Islamabad.

The ARD, which includes the PML and the Pakistan Peoples' Party of self-exiled former premier Benazir Bhutto, says more than 2,000 of its workers and leaders have been detained illegally since last Thursday.

Ejaz Shaffi, a senior ARD official and a member of the suspended National Assembly, said the PML had decided to change the venue and attempt to rally at Empress Market.

"Twenty-five thousand security personnel have been deployed. We have changed the venue and we are going to Empress Market," Shaffi said, adding that he hoped about 400 to 500 people would attempt to meet.