Yemen's army chief vowed Tuesday no let-up in an offensive against Al-Qaeda after a suicide bomber killed 96 soldiers in a massive attack in central Sanaa and two other would-be attackers were arrested.

Also in the capital, a leading member of Yemen's dwindling Jewish community was stabbed and fatally wounded, the community's rabbi told AFP, urging the authorities to protect his co-religionists.

The attack on Monday, which also injured some 300 soldiers, drew sharp condemnation from Western powers and a pledge by US President Barack Obama to work with Sanaa to crush Al-Qaeda in the Arabian Peninsula (AQAP), blamed for several attempts to blow up US airliners and cargo planes.

The suicide bomber, dressed as a soldier, detonated his explosives as an army battalion was rehearsing a parade at the capital's Sabeen Square scheduled for Tuesday to mark the 22nd anniversary of Yemen's reunification.

The parade was replaced by a low-key, sombre ceremony attended by President Abdrabuh Mansur Hadi, who watched from behind a bullet-proof shield and left as soon as the event ended without making a speech.

In south Yemen, meanwhile, police shot dead a protester during clashes as separatists called for a day of civil disobedience to mark the anniversary, medics and witnesses said.

The clashes took place after protesters used rocks to block roads, set tyres alight, and closed shops in the capital of Hadramawt province, witnesses said.

Amid the insecurity across the country, Harun Zindani, a leading member of Yemen's Jewish community, died in hospital after being stabbed by a vendor of the local narcotic known as qat.

The vendor reportedly attacked Zindani from behind shouting: "You Jew, you have hurt my business with your sorcery." He was overpowered by passers-by and other shopkeepers, who held and eventually handed him over to the police.

The community's rabbi, Yahya Yussef Mousa, appealed to the president to protect Yemen's tiny Jewish community.

"We are a weak people who have nothing against anyone, and I ask the authorities to apply Sharia (Islamic law which imposes the death penalty for murder) against this aggressor without trial," he said.

Zindani was originally from the northern province of Saada where Zaidi Shiite rebels fought a bloody war against the regime of former strongman Ali Abdullah Saleh.

Since 2007, authorities have moved members of the minority community from Saada to a safe neighbourhood in Sanaa near the US embassy.

Yemen's army chief of staff Ali al-Ashwal used the reunification anniversary to warn Al-Qaeda and its local affiliates that the "war" against them would continue unabated.

"The barbaric attack on Sabeen Square will not scare us and will not prevent us from going ahead with our war on these evil elements," Ashwal told the ceremony which was held amid tight security.

"Our war on them will not stop until we free our land," said Ashwal, who was among the officials, including defence minister Mohammed Nasser Ahmed, apparently targeted in Monday's attack.

Soon after the blast, Yemeni authorities arrested two men in Sanaa who were found hiding explosive belts under their military uniforms, a security official said.

The men, "wearing explosives belts each packed with 13 kilograms (28.6 pounds)" were arrested in Sanaa, the official said, speaking on condition of anonymity. "They were planning to carry out further attacks."

AQAP, Al-Qaeda's Yemen branch, claimed responsibility for the attack which it said targeted "the defence minister and other leaders of the US war on our people in Abyan" province in the south.

Yemen's military launched a major offensive in Abyan on May 12 in a bid to drive Al-Qaeda linked jihadists out of towns and cities in the restive province where they have held sway since May last year.

Since the offensive began, 234 people have been killed, according to a tally compiled by AFP, including 158 Al-Qaeda fighters, 41 military personnel, 18 local militiamen and 17 civilians.

Local sources in Abyan told AFP on Tuesday that clashes erupted anew on the western outskirts of Al-Qaeda stronghold Jaar, where the army is currently focusing its assault.

At the same time, the sources said, fighting had subsided around Abyan's capital Zinjibar, which the jihadists have held since last year.

"The war on terror will continue until it is completely destroyed regardless of the sacrifices," President Hadi said after Monday's attack, the deadliest since he took power in February.

Obama said the United States was very worried about the threat posed by AQAP and pledged to work with the Yemeni government to crack down on the group.

"We are very concerned about Al-Qaeda and extremist activity in Yemen," Obama told reporters at a NATO summit in Chicago on Monday devoted to ensuring that Al-Qaeda is not allowed to regroup in another one-time terror haven, Afghanistan.

The United States has carried out regular drone strikes against AQAP suspects in Yemen.