By Frances Harrison BBC correspondent, in Valaichchenai

The leader of Sri Lanka's main Muslim party says Tamil-Muslim communal violence in the east of the island could derail peace efforts.

It is important for the LTTE to maintain their credibility by following up on the assurances they gave us

Rauf Hakeem, SLMC leader

Rauf Hakeem, who heads the Sri Lankan Muslim Congress (SLMC), said the unrest posed a "substantial threat" to the peace process between the government and separatist Tamil Tiger rebels.

Tit-for-tat clashes have left at least eight people dead and scores injured in two days of unrest in the Valaichchenai area of Batticaloa district.

There is a strong smell of smoke and charred ashes in the Valaichchenai market, where the army says 96 shops were set ablaze.

Inside, some fires are still smouldering, as shopkeepers try to salvage coins and other remains, while outside the streets are littered with broken glass.

The shops belong to both Muslims and Tamils.

Army curfew

Although the local military commander says the situation has been calm since Friday night, emotions still run high.

The two communities are effectively separated by large numbers of soldiers in flak jackets, carrying rifles, and the entire area is under curfew.

Local people complain the police have sometimes done little to prevent mob violence, even when it has happened near their police stations.

Army deployment has been strengthened, especially in areas where Muslim and Tamil villagers border one another.

The military officer in charge of the area, Major General Sunil Thennakoon, says he has had lengthy discussions with the local leaders of the Tamil Tiger rebel group, in an attempt to win their help in calming what is clearly a very volatile situation.

Call for restraint

The LTTE has a responsibility to the Muslims... if they call themselves the sole representatives of the Tamils

Rauf Hakeem

Mr Hakeem, who is also a government minister, appealed to the Tigers on Saturday to intervene with the local Tamil population.

He wants them to do more to implement their promises to protect the rights of Muslims in areas the rebels influence or control.

The SLMC visited the Valaichchenai area on Saturday.

He urged restraint in order to resolve this latest ethnic rift in Sri Lanka.