YANGON: Myanmar state media Sunday warned of "anarchy" and a spiral of retaliation after a spate of deadly sectarian violence between Buddhists and Muslims that threatens to overshadow reforms in the nation.

The New Light of Myanmar urged people to exercise "tolerance" in the wake of rioting on Friday and Saturday that saw hundreds of Buddhist villagers' homes set ablaze and left seven dead in Rakhine state, which borders Bangladesh.

"Hatred, misunderstanding or any other kind of conflict among the rural people or urbanites serve no one's interest, but invites retaliation, anarchy, stagnation and lawlessness creating an environment where peace is totally absent and where democracy cannot flourish at all," said an editorial.

Police and military units were deployed to bring an end to the unrest, in which 17 people were also wounded and nearly 500 houses destroyed, according to the official media.

Rakhine state is named for its dominant, mostly Buddhist ethnic group but is also home to a large Muslim population including the Rohingya, a stateless people described by the UN as one of the world's most persecuted minorities.

The Myanmar government considers the Rohingya as foreigners and not one of the nation's ethnic groups, while many citizens view them with hostility and suspicion, believing they do not belong in the country.

A cycle of apparent revenge attacks began with the recent rape and murder of a Rakhine woman. Last Sunday, an angry Buddhist mob mistakenly believing the perpetrators of the rape were on board a bus, beat 10 Muslim passengers to death.

The rioting flared Friday when at least four Buddhists were killed in the area, with a second wave of violence in remote villages early Saturday.

The New Light warned that "deep mistrust" could serve to turn the region into a "cauldron" of misleading information.

"In this situation rumours float well spreading to all corners like the evil knocking every one's door as a messenger of death and destruction pushing people nowhere but into a circle of retaliations," the newspaper continued.

On Sunday around 600 ethnic Rakhine gathered at the Shwedagon Pagoda, a revered Buddhist site in the main city of Yangon, to protest against the latest violence, according to an AFP reporter on the scene.

"(The unrest) harms national security, national interests and the rule of law. This is not only the problem of the country, but also the problem of the whole world," said Tin Htoo Aung, chairman of the Rakhine National Network activist group.

In a statement the demonstrators called for "increased security" across the state.

People held up pictures of burning villages and people apparently beaten in the attacks as well as banners proclaiming "Save the Rakhine" and calling for "Bengalis" -- a term often used for Muslim communities living near the border with Bangladesh -- to be "removed from Myanmar".

Myanmar's Muslims -- of Indian, Chinese and Bangladeshi descent -- account for an estimated four percent of the roughly 60 million population.

Many people in the country also known as Burma believe Buddhism forms an intrinsic part of national identity, according to experts.

According to the UN Myanmar has an estimated 750,000 Rohingya, living mainly in Rakhine. Another one million or more are thought to live in other countries.

Human Rights Watch on Saturday expressed "profound concern" following the riots and said discriminatory government policy had helped stoke tensions between the Rakhines and Rohingyas.

The unrest in Rakhine comes in the wake of a series of tentative ceasefires Myanmar authorities signed with ethnic minority rebels around the country as part of wide-ranging reforms since the end of outright military rule last year.

While battles continue to rage in northern Myanmar, the truces are seen as an effort to draw a line under decades of unrest. AGENCIES