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Venezuela's President, Nicolas Maduro, has broken diplomatic relations and frozen economic ties with Panama.

The decision comes after the Central American nation requested a meeting at the Organization of American States (OAS) to discuss Venezuela's crisis.

Mr Maduro was speaking to other Latin American heads of state at events to mark the first anniversary of the death of the Venezualan leader Hugo Chavez.

At least 18 people have died in anti-government protests in the last month.

"I've decided to break political and diplomatic ties with the current government of Panama and freeze all trade and economic relations from this moment on," Mr Maduro told the presidents of Cuba, Raul Castro, Uruguay, Jose Mujica, and Bolivia, Evo Morales, among other leaders gathered around the tomb of Mr Chavez.

Panama's President Ricardo Martinelli expressed surprise at Venezuela's decision.

"Panama only hopes that this brother nation finds peace and strengthens its democracy," Mr Martinelli wrote on Twitter.

Panama's official statement said the country was "astonished" and called Mr Maduro's words "unacceptable".

"The measure announced by President Maduro should not become a smoke screen intended to hide reality," it read.

Earlier, thousands of government supporters and troops took part in a huge parade through central Caracas, commemorating the first anniversary of former President Chavez's death.

In other parts of the capital, anti-government protesters kept up their barricades, despite an appeal made by opposition leaders to "respect" the anniversary.

Last week, the government of Panama requested an urgent meeting of OAS member-states to discuss the unrest in Venezuela.

Venezuelans have long been complaining about high levels of crime, record inflation and shortages of some staple items.

But in the last three weeks marches initially started by disgruntled students in the western states of Tachira and Merida spread to other areas and gained support.

On Wednesday, the OAS said a meeting would take place the next day behind closed doors to decide whether or not to convene the region's foreign ministers over the issue.

Mr Maduro accused the Panamanian government of conspiring to bring down his government.

"There are moves by the United States government in accord with a lackey government of a right-wing president which has been creating the conditions for the OAS and other bodies to step towards an intervention in our country," Mr Maduro said.

The Venezuelan president also criticised OAS President Jose Miguel Insulza, who had suggested earlier that a group of observers could be sent to Venezuela – if its government and the opposition found it useful.

"Don't intervene in Venezuelan home affairs," was Mr Maduro's message to Mr Insulza.