The body was seen floating in river Jhelum by some persons near Amirakadal bridge and was immediately fished out, officials said.
A police spokesman said preliminary examination of the body revealed that the deceased was a non-Muslim.
"The process of ascertaining the identity of the deceased and cause of his death is underway," he added.
Earlier, some people claimed that the body bore pellet injuries, causing tension in the area which was abuzz with business activities after the separatists announced a '12-hour relaxation' in the strike from 6 pm.
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Around 500 persons performed a Namaz-e-Jinazah (funeral prayer for Muslims) at the business centre.
On getting information about the body, a police party rushed to the scene, fired a few teargas shells and removed it for identification and autopsy, the officials said.
As the news spread, the shopkeepers in nearby Lal Chowk and adjoining areas also pulled down the shutters.
Officials said reinforcements have been rushed to maintain law and order.
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