* Yemen to be divided into six federal regions
* Southern separatists want full independence
* And concerned that former South Yemen to be split
ADEN, Yemen, Feb 21 (Reuters) - At least one person was killed and 20 wounded in overnight clashes between police and pro-independence demonstrators in southern Yemen, a local official and witnesses said on Friday.
Yemen's president has approved turning the country into a federal state, giving more regional autonomy, but stopping short of granting independence to what was South Yemen, a state that merged with the north in 1990.
Some southerners have rejected the plan, raising fears of further instability as President Abd-Rabbu Mansour Hadi struggles to restore order in the impoverished country seen by Washington as a frontline in its battle against al Qaeda.
Thousands of protesters tried to march through the streets of the city of Aden, renewing demands for full independence and rejecting the federation deal. A local official said a man in his twenties was killed. A police official contacted by Reuters said casualties figures were not available.
Authorities banned all protests in Aden and security forces cordoned off the area. Demonstrators tried to march to the city centre again after Friday prayers and police opened fire and used teargas to disperse them, witnesses said.
Demands by southern separatists have delayed a broad programme of constitutional reforms that must be agreed before general elections are held, completing a U.S.-backed power transfer deal that forced former President Ali Abdullah Saleh to step down in 2012.
Political factions last month gave interim President Hadi an extra year to finalise Yemen's federal status and oversee the drafting of a new constitution that will form the basis for elections slated for next year. Work on the constitution cannot progress without an agreement on the shape of the Yemeni state.
Some southerners fear that splitting the south into two regions - Aden and Hadramout- in the overall six-region federal state - would dilute their authority and deprive them of control over Hadramout, where some of Yemen's oil reserves are found.
The 1990 union between the tribal North Yemen and the Marxist South soon went sour and a civil war broke out four years later in which then-President Saleh crushed southern secessionists and maintained the union. (Reporting by Mohammed Mukhashaf; Writing by Rania El Gamal; Editing by Robin Pomeroy)