CANTON, May 24, Reuter - Premier Li Peng, the man China's demonstrators love to hate, came in for fresh ridicule and contempt at a giant pro-democracy rally overnight in the southern city of Canton.

A deafening cheer went up and the air rang with firecrackers and bicycle bells when leaders of a march by several hundred thousand people said they had heard Li had stepped down.

The euphoria among the students, journalists and workers faded when doubts spread about the accuracy of the rumour, the latest of many to swirl around a nation excited by its biggest mass protests since the 1949 revolution.

Li, who ordered the imposition of martial law in parts of Peking last Saturday, was shown bound and gagged in one Canton poster, beside the words "we won't believe it until we see it".

"We have been fooled so often before we dare not hope for too much. It would be almost too good to be true," said one Canton university student.

The Soviet-educated Li was also the butt of comic songs sung by the Canton demonstrators as they ignored heavy rain to finish a five-hour trek through the city.

After the march, tired and bedraggled students rested before dawn in a central Canton park, exchanging opinions about their political masters over steaming cauldrons of tea.

One 24-year-old student said he thought it made little difference whether Li or his reform-minded rival Zhao Ziyang, the Communist Party general secretary, emerged uppermost in the party's internal power struggle.

"Zhao Ziyang is cleverer than Li Peng. While Li Peng goes in a straight line, Zhao takes the back streets. The goal is the same," he said.

Others disagreed. "Zhao is not just a power-seeker. He really supports our ideals of democracy and freedom," said languages institute student Brenda Yang.

The Canton marchers were joined by several hundred students from Hong Kong and Macau, which are due to be handed over to Chinese control by Britain and Portugal respectively in the late 1990s.

Big demonstrations have been held in Hong Kong and Macau in support of the pro-democracy movement. About one-sixth of the British colony's population turned out for a peaceful mass rally on Sunday.