Separatists seeking to revive a southern socialist state that Saleh united with the north in 1990 have been demonstrating against the vote, scheduled for Feb 21, and northern Shi'ite rebels have said they will also not take part.
"The army forces located at military positions overlooking the town opened fire on thousands of people protesting against the upcoming presidential elections," a leader of the southern separatist movement told Reuters.
"One demonstrator died immediately and another 12 were injured, while another man who was standing on the balcony of a hotel adjacent to the electoral committee's office was killed by a stray bullet."
The election is part of a plan hammered out by Yemen's wealthier Gulf neighbours to end a year of political upheaval in the impoverished Arabian Peninsula state.
Weakened by months of protests against Saleh's rule, the Yemeni government has lost control of whole chunks of the country, giving Shi'ite rebels known as Houthis free rein in the north, along the border with oil-exporter Saudi Arabia.
In the south, Islamist militants have seized control of several towns. Unidentified gunmen attacked the electoral committee's office in Dalea last month.
Some southerners, who say northerners have seized their resources and discriminate against them, have been burning their voting cards in protest at the election, in which Yemen's acting leader Abd-Rabbu Mansour Hadi is the sole candidate.
Saleh is currently in the United States receiving medical treatment for wounds inflicted during an assassination attempt on him last year, but has said he will return home for the vote, shedding doubt on his commitment to leave office. — Reuters
