Smokes and flames billow from the burnt buildings at a village in Sittwe, capital of Rakhine state in western Myanmar, where sectarian violence are ongoing Monday, June 11, 2012. The Buddhist-Muslim violence poses one the biggest tests yet for Myanmar's new government as it struggles to reform the nation after generations of military rule. (AP Photo/Khin Maung Win)

SITTWE, Myanmar - Gunshots rang out and residents fled blazing homes in western Myanmar Tuesday as security forces struggled to contain deadly ethnic and religious violence that has killed at least a dozen people and displaced thousands more.

The conflict pitting ethnic Rakhine Buddhists against Rohingya Muslims in coastal Rakhine state marks some of the worst sectarian unrest in years. President Thein Sein has declared a state of emergency and deployed army troops to restore stability, warning the fragile nation's recent democratic reforms are under threat as it emerges from half a century of military rule.

On Tuesday in the regional capital, Sittwe, police fired live rounds into the air to disperse a group of Rohingyas who could be seen burning homes in one neighbourhood. Hordes of people ran to escape the chaotic scene.

"Smoke is billowing from many directions and we are scared," said Ma Thein, an ethnic Rakhine resident. "The government should send in more security forces to protect both communities."

Truckloads of security forces have been deployed in Sittwe for days, and much of the port city was reported calm, including its main road. But homes were burning in three or four districts that have yet to be pacified.

In one, police fired skyward to separate hundreds-strong mobs wielding sticks and stones; in another, soldiers helped move 1,000 Muslims out on trucks to safer areas.

Ma Thein said that some people were running short of food and water, with banks, schools and markets closed. Some small shops opened early Tuesday to sell fish and vegetables early in the morning to residents who braved the tense streets.

The unrest, which began Friday, was triggered by the rape and murder last month of a Buddhist girl, allegedly by three Muslims, and the June 3 lynching of 10 Muslims in apparent retaliation. There are long-standing tensions between the two groups.

The government regards the Rohingyas as illegal migrants from Bangladesh and has rendered them stateless by denying them citizenship. Although some are recent settlers, many have lived in Myanmar for generations and rights groups say they suffer severe discrimination.

The United Nations' refugee agency estimates 800,000 Rohingya live in mountainous Rakhine state. Thousands attempt to flee every year to Bangladesh, Malaysia and elsewhere in the region, trying to escape a life of abuse that rights groups say includes forced labour, violence against women and restrictions on movement, marriage and reproduction.

The conflict poses one the biggest tests yet for Myanmar's new government as it tries to reform the nation after the long-ruling army junta largely ceded power last year. The handling of the unrest will draw close scrutiny from Western powers, which have praised Thein Sein's administration and rewarded it by easing years of harsh economic sanctions.

Human Rights Watch called on the government to "take all necessary steps to protect communities at risk" in Rakhine state and accused authorities of not doing enough to stop the violence.

The New York-based group's deputy Asia director, Elaine Pearson, also questioned Thein Sein's decision to impose a state of emergency, which allows the military to take over administrative functions in the area.

"Given the Burmese army's brutal record of abuses ... putting the military in charge of law enforcement could make matters worse," Pearson said. Myanmar is also known as Burma.

"The Burmese government's policies of exclusion have fostered resentment against the Rohingya," Pearson said "Longer-term, the government should be thinking about how to address the years of discrimination and neglect that the Rohingya have faced."

On Monday, U.S. Secretary of State Hillary Rodham Clinton urged a halt to the violence and called on authorities to conduct a quick, transparent investigation.

State run newspapers reported that 4,100 people who lost homes had taken refuge in Buddhist monasteries, schools and in a police headquarters the towns of Maungdaw and Buthidaung, both in Rakhine state.

Thousands more were reportedly displaced in Sittwe itself, according to a Rakhine political party called the Rakhine Nationalities Development Party. The party is one of the major parties associated with the country's ethnic minorities, and won 35 parliamentary seats in the 2010 elections.

State media has reported eight dead in Maungdaw, and an AP journalist saw the corpses of four people killed in Sittwe.

News from © The Associated Press, 2012