A central Myanmar town declared a curfew for a second night on Thursday after clashes killed 10 people, including a Buddhist monk, and injured at least 20, authorities said.
Riots erupted in Meikhtila, 540 km (336 miles) north of Yangon, on Wednesday after an argument between a Buddhist couple and the Muslim owners of a gold shop escalated into a riot involving hundreds of people, police said.
"We can't say the situation is under control. The police force is not strong enough to control the situation," Win Htein, a member of the opposition National League for Democracy party, told Reuters.
Relations between Buddhists and minority Muslims have simmered since sectarian violence last year in western Rakhine state in which 110 people were killed, according to official sources, and 120,000 people made homeless.
Such violence could endanger democratic reforms undertaken since military rule ended in 2011, the United Nations warned this month.
The Meikhtila clash raises concern that religious unrest could spread in Myanmar, a Buddhist-dominated country where about five percent of the 60 million population are Muslim.
Riots also broke out in the commercial capital Yangon last month after Buddhists attacked what they said was an illegal mosque.
In Meikhtila, at least one mosque, an Islamic religious school, several shops and a government office were set alight, said a fire service official who declined to be identified.
Senior government officials said they were monitoring the situation while roads linking Meikhtila to other major cities in the region had been temporarily closed.
The U.S. ambassador to Myanmar, Derek Mitchell, said he was "deeply concerned" about the violence.
A former dissident who heads a civic group said the response of the security forces to unrest was often questionable.
"They don't make enough effort to control the situation," Min Ko Naing, of the 88 Generation Peace and Open Society group told reporters in Yangon on Wednesday.
An independent team that has conducted an investigation into the Rakhine State violence is due to release its much-delayed report this month. Its recommendations on the sensitive topic of what to do with 800,000 mostly stateless Rohingya Muslims could further inflame tension.