In the Wanchai bar district, some protesters had spray-painted graffiti and smashed cash machines in an HSBC bank branch when plainclothes police moved in, pepper-spraying crowds in a tense face-off, after which several rounds of tear gas were fired.
Protesters have directed their ire at the global banking group HSBC saying that it had closed an account that had been a fund-raising platform for the protest movement, a claim the bank has strongly denied.
Hong Kong has been embroiled in more than six months of anti-government protests that have now spilled into 2020, with protesters demands including full democracy and an independent inquiry into allegations of police brutality
Thousands of anti-government protesters earlier gathered on a grass lawn in Victoria Park under grey skies. Citizens young and old, many dressed in black and some masked, carried signs such as "Freedom is not free" before setting off.
"It's hard to utter 'Happy New Year' because Hong Kong people are not happy," said a man named Tung, who was walking with his two-year-old son, mother and niece.
"Unless the five demands are achieved, and police are held accountable for their brutality, then we can't have a real happy new year," he added, referring to the push for concessions from the government including amnesty for the more than 6,500 people arrested so far.
The march is being organised by the Civil Human Rights Front, a group that arranged a number of marches last year that drew millions.
Along the route, a number of newly elected pro-democracy district politicians mingled with the crowds on their first day in office, some helping collect donations to assist the movement.
"The government has already started the oppression before the New Year began ... whoever is being oppressed, we will stand with them," said Jimmy Sham, one of the leaders of the Civil Human Rights Front.
Thousands of Hong Kong revellers had earlier welcomed in 2020 on neon-lit promenades along the iconic skyline of Victoria Harbour, chanting the movement's signature eight-word Chinese protest couplet - "Liberate Hong Kong. Revolution of our Time" - for the final eight seconds before clocks struck midnight.
A sea of protesters then surged down Nathan Road, a major boulevard, blocking all lanes in a spontaneous march breaking out within minutes of the new decade. Some held signs reading "Let’s keep fighting together in 2020".
Overnight, police fired tear gas, rubber bullets and water cannons during some brief standoffs.
China's President Xi Jinping said in a New Year's speech that Beijing will "resolutely safeguard the prosperity and stability" of Hong Kong under the so-called "one country, two systems" framework.
Many people in Hong Kong are angered by Beijing's tight grip on the city which was promised a high degree of autonomy under this framework when the former British colony returned to Chinese rule in 1997.
Beijing denies interference and blames the West for fomenting the unrest.
A group of 40 parliamentarians and dignitaries from 18 countries had written an open letter to Hong Kong's leader Carrie Lam on New Year's Eve, urging her to "seek genuine ways forward out of this crisis by addressing the grievances of Hong Kong people."
The protest movement is supported by 59% of the city's residents polled in a survey conducted for Reuters by the Hong Kong Public Opinion Research Institute.
Demonstrations have grown increasingly violent in recent months, at times paralyzing the Asian financial centre.
Protesters have thrown petrol bombs and rocks, with police responding with tear gas, water cannon, pepper spray, rubber bullets and occasional live rounds. There have been several injuries.
