Eleven arrests were reported before a tense standoff developed between rows of police holding batons and a surging crowd close to the Bank of England.
One man, bleeding from the head, was repeatedly seen to apparently goad officers, who did not respond.
At one point, a black-clad masked man in the crowd struck an officer with a long pole. The officer was pulled away by colleagues and required treatment at the scene.
Crowds reacted to rumours of police movements in an attempt to avoid being encircled, causing more surges in large numbers of people.
Initially, police and journalists were in danger of outnumbering the protesters but, as the day has worn on, the crowds have thickened.
A diverse group of interests are represented by the protesters, who include those lobbying for action against the banks, greater protection of the environment or just downright anarchy, among several others.
One group, G20 Meltdown, planned four carnival parades into the heart of the financial district led by effigies of the "four horsemen of the apocalypse", representing war, climate chaos, financial crimes and land enclosures.
Hundreds gathered at London Bridge station for a march against financial crimes.
Two protesters climbed on to the plinth supporting Wellington's statue, sited opposite the entrance to the Bank of England, and unfurled a banner calling for action on homelessness.
Officers standing on the steps at the front of the Bank of England were pelted with fruit as protesters scrambled beneath them.
Several police helmets were also grabbed and thrown in the air as dozens of protesters surged forward and forced officers to retreat on to higher plinths at the base of the building.
A red smoke canister was set off, leaving at least one officer covered in bright red powder.
Roger Little, 27, an administration worker from Birmingham, said he travelled overnight with four friends to join the day of protest.
He said: "I am not a member of any of the groups represented today but I felt compelled to come down.
"We are going to march with a noisy protest in the middle of the City to show the people that are benefiting most from this system that we are not going to put up with it."
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Jon Simmons, 31, a charity worker from Ealing, in west London, said he and several friends took the day off work to try to make their voices heard.
Mr Simmons, who was dressed in brightly-coloured military clothing, said: "I hope it will be a peaceful and relaxed day of protest with a lot of people coming together.
"Of the four horsemen of the apocalypse, we are the black horse, and we are supporting people who are landless and homeless."
Office workers looked down from upper-storey windows and waved cash at the demonstrators as the protest made its way down Old Broad Street.
The gesture was met with jeers and angry shouts from demonstrators.
Young and old joined in the demonstration and hundreds made their way slowly and peacefully towards the Bank of England.
Many protesters carried signs - most raising financial and climate change issues.
One sign read "Ice sheets melting, take action". Another said "Consumers suck" and another read "Carbon change too little too late".
There was a carnival atmosphere as marchers crossed London Bridge with numerous camera crews, photographers and reporters in tow.
Banners calling for an end to the war and effigies of hanged bankers were hoisted in the air as a brass band played a jaunty tune.
Malte Arhelger, who lives in Brussels, said he made the trip to the capital for two reasons - "Love and politics".
Standing with his girlfriend, he said: "Hopefully the march will be as peaceful as possible.
"The march on Saturday has shown it's possible to put important issues to the forefront without violence."
Mr Arhelger, who is German, stood with a banner proclaiming: "Make love not leverage."
His girlfriend, Eva Nilsson, 26, from Finland, who lives in Stepney Green, east London, said: "There are so many problems in the financial markets and now is the time, because of the G20, to build up pressure so that Government creates more regulations."
The procession progressed slowly across the bridge headed by a giant banner which read: "Capitalism isn't working."