Mark Dodd, Dili – United Nations riot police backed by soldiers from the peacekeeping force launched an extensive security operation yesterday to clear Dili's central market area of scores of armed youths, after the worst violence seen in the capital since last year's militia rampage.

East Timor independence leader Mr Xanana Gusmao held emergency talks on Sunday with senior UN officials on how to restore stability. He gave strong backing for firm measures by the UN to restore law and order in the capital, a senior official from the pro-independence CNRT umbrella group told the Herald.

Three people were arrested for possessing illegal arms, mostly concealed knives or swords. Earlier, police made 11 arrests after several hours of unchecked gang violence resulted in the destruction of property and confined terrified residents to their homes.

Asking not to be named, the senior official said rising social tensions linked to mass unemployment were a factor in the rioting, but the main issue was violence between rival gangs.

"It's a mix of things," he said. "Certainly socio-economic problems haven't helped. The market is a logical place for this to start because it is where you find the poorest and the most marginalised people. There have also been criminal elements associated around the market. But I think it has more to do with the gangs, generally troublemakers and louts. They threaten people and look for trouble."

At least five people were injured, two seriously after wild brawling erupted at the end of a soccer match between a UN Brazilian team and a local club.

Eyewitnesses said that a gang of youths from western Baucau, armed with knives, machetes and clubs, started the fight that initially was aimed at members of a martial arts club.

Angered by the street anarchy and the UN's slow response to stem the violence, Mr Gusmao threatened to bring Falintil fighters out of their cantonment on Sunday to restore order.

But in talks later on Sunday evening, he had apparently cooled down. Along with fellow independence leader Mr Jose Ramos Horta, UN chief Mr Sergio Vieira de Mello and senior UN police and military chiefs, Mr Gusmao agreed on a joint operation of East Timorese security officials, police, UN soldiers and Portuguese personnel from the special Tactical Response Unit based in Dili.

Almost four hours after the outbreak of violence there was still no sign of the tactical response unit. On two-way radios, orders came from police headquarters reminding officers that sidearms were to be used only for self-defence.

Compounding the situation was a strike over pay and conditions by many UN staff, including drivers and interpreters. By 7.30pm, most bars and cafes had emptied as news of the violence spread.

Streets became eerily quiet and the few shops quickly closed. At the Turismo Hotel, Australian and New Zealand members of the UN Civilian Police (Civpol) ordered a "lock-in" for security reasons. US servicemen were ordered to remain at their lodgings.

Late Sunday evening, in an address on UNTAET Radio, Mr Gusmao warned gang members to clear off the streets or face stern action. He said violence in Dili would prevent foreign investment and set back East Timor's recovery.