Lebanese politician Saad al-Hariri abandoned his effort to form a new government on Thursday, dimming the chances of a cabinet being agreed any time soon to start rescuing the country from financial meltdown.

Hariri announced his decision after meeting President Michel Aoun, saying it was clear they could not agree, underscoring the political squabbling that has blocked the cabinet formation even as Lebanon sinks deeper into crisis.

Hariri, a former prime minister and Lebanon's leading Sunni Muslim politician, was designated in October to assemble a government following the resignation of Prime Minister Hassan Diab's cabinet in the wake of the Beirut port explosion.

Protesters blocked some roads near predominantly Sunni areas of Beirut after his announcement, setting fire to trash and tyres. Army troops deployed, firing in the air to disperse protesters who pelted the soldiers with missiles, live TV footage showed.

The World Bank has described Lebanon's depression as one of the sharpest in modern history. The currency has lost more than 90 percent in two years, poverty has spread and Lebanon has been crippled by fuel shortages. Fears of social unrest are growing.

Hariri's decision marks the culmination of months of conflict over cabinet posts between him and Aoun, the Maronite Christian head of state who is allied to the Iran-backed Shi'ite Muslim group Hezbollah.

(With input from agencies)