At least 20 people have been killed in clashes between the Muslim Hui minority and the Han majority in central China's Henan province, with the area put under military blockade.
"There are more than 10 Hui Muslims who died and more than 10 Han died," said an employee surnamed Wang from a taxi company in Zhongmou county, where the clash occurred.
Residents told AFP violence between Huis and Hans erupted last week after Hui truck drivers from the Hui populated Nanren village tried to pass through a village mostly inhabited by Han Chinese and a Hui was beaten up over a traffic dispute.
Villagers from both sides fought each other with farm tools, they said.
The government late Monday confirmed a violent clash occurred. Seven people were killed, 42 injured and 18 arrested, the official Xinhua news agency said.
The clash began on October 27 and continued until Sunday but was now under control, Xinhua said.
It said violence erupted when a villager surnamed Lu from Nanren village fought with a man surnamed Liu from Nanwei village over a traffic dispute.
Lu and several Nanren villagers later went to Liu's home and assaulted him and his family, Xinhua said.
Afterwards, residents of both villages assembled weapons and fought each other. One villager was beaten to death on the spot and two died in hospital a day later, Xinhua said.
Of the 42 injured, 19 have been released from hospital, it said.
Xinhua did not say the clash was between the Huis and the Hans.
Wang, the taxi company employee, said the violence last week was the worst in memory.
"Clashes have happened frequently before but this is the worst," he said. "The two groups used farm tools to fight each other."
The area remained tense and under military blockade Monday, teeming with hundreds of police and paramilitary soldiers.
Four foreign journalists who entered the area were detained, and police lining the roads stopped several other reporters from entering. Busloads of armed police in riot gear went into the area.
An imam with Nanren village's mosque said two Huis died in the village and four or five Hans were also killed.
He said the unrest had yet to be quelled.
Soon afterwards thousands of Han Chinese surrounded Nanren, the imam surnamed Hu said. A confrontation developed in which several houses were burnt down and a brick factory was destroyed, Hu said.
A resident surnamed Han told of 10 other deaths in a related incident Sunday in Liangchenggang village 10 kilometres (6.2 miles) east of Nanren, in which Hui Muslims from other areas arriving apparently to back the Huis in Nanren clashed with anti-riot police.
"I heard that 100 to 200 Muslims arrived from another part of China and they were stopped at a roadblock," Han said.
"They got off the bus and started fighting with police. Police used tear gas to disperse them but they got through. I heard that 10 people died in that clash."
Han said he did not know whether police or Muslims died but said he believed the fighting was not over. "The Han Chinese will want revenge," he said.
The New York Times reported that almost 150 people were killed but residents sought to play down the figure.
An official surnamed Chen with the Henan Religious Affairs Bureau told AFP: "Officials have been sent there to try and calm down the two sides. When the clash erupted, the situation was intense."
Journalists in the region said a news blackout was in force.
"They are afraid to trigger conflict among the ethnic groups," said a journalist with Henan Daily.
China's Huis are descendants of Arab and Persian traders. Over the centuries they have mixed so thoroughly with the Han Chinese that they are indistinguishable from each other but for religion, customs and dress codes.
The Huis are generally considered among China's best assimilated minorities, but occasional clashes with other groups are known to occur.
In early 2002 Huis clashed with Tibetans in a rural county of northwestern Qinghai province, leading to a large number of injuries. Several Huis were handed long jail terms.