Nepal's King Gyanendra on Wednesday celebrated a year in power, and promised to hold municipal polls amidst a 'black day' call by the opposition.

Nepal was for friendly relations with all countries, including India and China, Gyanendra said, adding that the country wants to benefit from the two giant economies by acting as a transit point between them.

Vowing to go ahead with the municipal polls scheduled for February 8, dubbed as a 'farce' by opposition parties, the monarch said, "Constitutional monarchy and multi-party democracy have already started and people are actively participating in the election."

In a televised address to the nation, he promised free and fair elections. "The elections are the only means to guarantee people's rights consolidate democracy," he said. Claiming that terrorist activities had narrowed down to few sporadic criminal activities, he urged Maoists to join the mainstream by participating in the elections.

The Monarch said that parliamentary elections would be held by 2007. "Within three years of my rule, all elected bodies, including local government and Parliament will be made representative," he claimed.

Nepal's monarch claimed that peace will be restored in the country within next year and pledged to curb corruption, make economic and administrative reforms, and boost Nepal's international image.

He said the country's foreign policy had become clear-cut and stable. "Foreign policy is being guided by national interest and mutual benefit, and Nepal wants friendly relations with all the countries, including India and China," he said.

The King said he was under compulsion to strike a balance between maintaining human rights and freedom and containing terrorism. Nepal's Sadbhavana Party's senior central member Khusi Lal Mandal, in his reaction to the King's speech, said there was nothing new in the Royal address.

"The King has defended his move to grab power last year and there is no indication of forward movement. He has failed to address issues raised by the opposition and his one year direct rule has proved a failure," he said.

Major political parties in Nepal, the Federation of Nepalese Journalists, human rights activists, students and professional organizations are organizing nationwide protests and demonstrations to mark the first anniversary of King's power grab as a Black Day. The government has deployed heavy security personnel in and around Kathmandu.

Hundreds of opposition activists were detained across the country on the eve of the royal takeover. At least 600 people were arrested across the country on Tuesday night, including over 150 from Kathmandu, party sources said.