UPDATE 1-Algerian PM starts talks to form new government

Algeria's newly-appointed prime minister has started talks to form a new government, the state news agency reported on Sunday, in a move designed to appease protesters demanding President Abdel Aziz Bouteflika and his inner circle step down.

The new cabinet will include experts without political affiliation and will "reflect the demographics of the Algerian society", APS quoted an official source as saying. Prime Minister Noureddine Bedoui is unlikely to defuse anger on the streets by kicking off talks on a new administration.

Algerians who have been demonstrating for over three weeks have rejected overtures by Bouteflika, who has reversed a decision to stand for another term after 20 years in power. He stopped short of relinquishing office and said he would stay on until a new constitution is adopted, effectively extending his current term.

Protesters have made it clear they want a whole new generation of leaders and are likely to see the formation of a new government as a ruse. On Friday, hundreds of thousands of protesters staged the biggest demonstration since the unrest began. Some carried banners saying "no to Bedoui". (Reporting By Algeria Newsroom; Writing by Michael Georgy Editing by Toby Chopra)