KATHMANDU, Nov 20 (Reuters) - Shops were shuttered, cars stayed off the streets, schools were closed and demonstrators burnt tyres in Nepal's capital on Thursday in a protest against the murder of two men blamed on Nepal's ruling Maoists.

The Maoists, who fought a civil war from 1996 to 2006, are now heading a coalition government after emerging as the largest party in an election in April.

Media reports this week said police had dug up the decomposing bodies of two young men who were allegedly taken by members of the Maoist Young Communist League (YCL) last month from a district adjoining Kathmandu.

The Maoist Young Communist League has been accused of violence and intimidation in the past but denied involvement in this incident and said the charges were baseless.

"The incident must be probed and the guilty ones be punished," YCL chief Ganesh Man Pun told Reuters.

Victims' families and friends called for the closure of transport, businesses, schools and colleges to protest against the killings and demand compensation.

"Everything has come to a halt and the streets are empty," police officer Pawan Khadka said.

Protesters marched through the streets chanting anti-Maoist slogans as hundreds of riot police looked on.

Banks and government offices were open but the attendance was thin as the employees had to walk to work.

During their decade-long conflict, the Maoists regularly sponsored general strikes crippling transport and businesses in the landlocked mountainous nation. (Reporting by Gopal Sharma; Editing by Simon Denyer and Sanjeev Miglani) (For the latest Reuters news on Nepal see http://in.reuters.com, for blogs see http://blogs.reuters.com/in/)

AlertNet news is provided by