But in a possible sign that a political solution might be found, the country's foreign minister said he believed the issues that triggered the violence were "still capable of resolution."
Members of the tiny country's 800-member army attacked the national police headquarters Thursday, accusing police of allying themselves with a large band of dismissed soldiers who have engaged in street battles with the military in Dili.
After an hour, U.N. police and military advisers negotiated a cease-fire under which the police were to surrender their weapons and leave the building, the AP reports.
But as the unarmed police were being escorted out, "army soldiers opened fire on them," killing 10 and wounding 26 others, according to U.N. spokesman Stephane Dujarric and a local hospital director, who said one died of his injuries overnight.
The unrest in East Timor is the most serious threat to the desperately poor country since it won independence from Indonesia in 1999. The attack on policemen illustrates the dangers facing peacekeepers from Australia, New Zealand, Portugal and Malaysia, the first of whom arrived on Thursday.
The United Nations, which spent millions of dollars training East Timor's army and setting up the country, urged the government to take "all necessary steps" to end the violence, which has been fueled by simmering tensions in a nation divided along east-west lines.
Machete-wielding youths were seen stopping a bus on the city's outskirts and asking its passengers where they were from, before eventually letting them go.
Residents described how, in one of the most grisly attacks, a mob came to their neighborhood Thursday, smashing windows and pouring gasoline on houses, one of which belonged to Home Security Minister Rogerio Lobato, though he was not inside at the time.
After it turned out that Deputy Prime Minister Andrei Belousov included the Fonbet betting company in the list of backbone enterprises that can count on state support, everyone started talking about these bookmakers.