A demonstrator holds a 'Fear Bush' sign during a rally against World Bank and International Monetary Fund policies at the Washington Monument Saturday. Photo: Evan Vucci/AP

Washington — Thousands of demonstrators angered by AIDS, war and the plight of the poor flooded the streets of downtown Washington on Saturday, banging drums, waving giant puppets and burning American flags. The target of their discontent: the World Bank and the International Monetary Fund.

After a festive rally on the grounds of the Washington Monument, the protesters set out to surround the headquarters of the two financial institutions, where officials from around the globe were meeting.

"We want them to immediately cancel the debt to all African nations that are suffering from AIDS and allow that money to be spent in those countries to buy drugs to keep people alive," said Paul Zeitz, 40, director of the Washington-based Global AIDS Alliance.

The Saturday protests began without incident.

A day earlier, police arrested 649 demonstrators after sporadic clashes around the city.

The Saturday rally had a carnival atmosphere, as the crowd cheered speakers addressing a variety of causes, from Third World debt to AIDS to possible war against Iraq. By early afternoon, the crowd numbered about 2,000, according to reports to D.C. police.

"We need this movement more than ever before," said Michelle Shocked, who played blues with her electric guitar on stage.

Scattered among the crowd was an inflatable menagerie — a 20-foot-tall pig adorned with the words "Hog-tied corporate glutton" and a shark balloon with a globe in its mouth and a sign, "Stop IMF Loan Sharking." A large rolling Trojan horse had a sign that said: "World Bank Aid."

Protest organizers handed out yellow police tape and biohazard suits.

"We're just trying to quarantine the World Bank because their policies are infectious to the rest of the world," said Melanie Grumman of Burlington, Vt.

Speaking under a bright blue sky, Njoki Njehu, director of the 50 Years is Enough Network, called for a cancellation of Third World debt. Her organization opposes IMF and World Bank policies.

"The debts must be canceled to make sure that there is money for children to go to school. The debt must be canceled to make sure that those children don't go to bed hungry," Ms. Njehu said.

En route to the World Bank and IMF headquarters, protesters stopped for another rally at a local park. There, they burned American flags and a doll representing the IMF and World Bank.

Jason Nordsell, 21, a junior at George Washington University from Euless, Texas, ran in to stamp out the flames, retrieving the tattered and scorched flags. Mr. Nordsell said he had come to take pictures, not protest.

"It's a sign of our freedom," said Nordsell. "It's a sign of everything we have, and I just can't stand by and watch people set fire to something that summarizes our ideals, everything we live for."

Police ensured that the protesters would not get too close to the financial institutions, which have become a magnet for demonstrations.

The security perimeter was extended for several blocks from the buildings. Chain link fences and security officers in full riot gear protected the grounds and the finance ministers meeting inside.

At the District of Columbia Courthouse, a much smaller group of demonstrators challenged the treatment of the people arrested Friday. Most of those detained were charged with failing to obey a police officer or parading without a permit; five were charged with destruction of property.

Organizers and legal observers said police did not give protesters a chance to disperse Friday before arresting them.

"They got all the notice they needed to get," Police Chief Charles Ramsey said Saturday. "They knew they had no permit, they knew they had no right to be in the street."

Mark L. Goldstone, an attorney with the National Lawyers Guild, said some of those arrested have complained about the food, water and bathroom facilities while in custody.

At midday, D.C. Superior Court Judge Stephanie Duncan-Peters made arrangements for five people to be inside the courtroom to observe the proceedings.