Dili – Hundreds of machete-wielding youths clashed in an East Timorese town Thursday in the latest outbreak of violence following the appointment of a new government early this month, the UN and police said.

Up to 300 people armed with machetes as well as steel darts and bows brawled in the Metinaro market, leaving it almost totally destroyed, the UN mission here said in a statement.

International and local security forces brought the situation under control in the town about 20 kilometres (12 miles) east of Dili, it said, but later about 10 houses and a motorcycle were torched. Three people were arrested.

The police commander for the area, Mateus Fernandes, told AFP that 26 houses had been burned down.

In the capital, where sporadic violence has occurred since President Jose Ramos-Horta announced that the government would be headed by former president Xanana Gusmao, large groups also engaged in fighting, according to the UN.

"Police have been in attendance and have fired tear gas to control the crowds. Six people have been arrested so far," the UN said.

The protests have apparently been stoked by sympathisers of the former ruling party Fretilin. The party won the most votes in inconclusive June elections but not the absolute majority required to rule.

A coalition headed by Gusmao controlling a majority of parliamentary seats was instead asked to form a government, but Fretilin insists that it should have been approached.

Thousands of international peacekeepers and UN police are on patrol in restive East Timor, alongside local police.

The forces arrived in the wake of violence between local security force factions on Dili's streets in April and May last year that left at least 37 people dead.