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The arrests, reported by an AFP correspondent at the scene, came less than a week after thousands of people from Ethiopia's ethnic Amhara group joined a demonstration in the northern city of Gondar.
Some of those arrested and taken away in pick-up trucks appeared to have been beaten to judge from their bloodied faces.
Saturday's rally was called by opposition groups from the Oromo, Ethiopia's main ethnic group. Some 500 people gathered amid a heavy police presence on the capital's main Meskel Square shouting slogans such as "we want our freedom" and "free our political prisoners."
Police swiftly moved in to break up the protest.
Prime Minister Haile Mariam Dessalegn had Friday announced a ban on demonstrations which "threaten national unity" and called on police to use all means at their disposal to prevent them.
Although small Saturday's rally was significant in that it was the first of a series by Oromo and Amhara, the two main ethnic groupings making up some 80 percent of the population, to be held in Addis Ababa.
Both groups say they suffer discrimination in favour of ethnic Tigrayans, who they say occupy the key jobs in the government and security forces.
Also Saturday, local people told AFP there had been further rallies and clashes with police in the city of Ambo and Nemekte, in the Oromo region, as well as a call for a rally in Baher Dar in the Amhara region.
Authorities have blocked access to social media, the activists' key channel for such rallying calls, since Friday.
Internet access was nearly impossible Saturday in Addis Ababa itself, an AFP journalist said.