|East Timor national police (AFP/File, Candido Alves)|
More than 100 houses as well as vehicles caught fire in the unrest in Zumalai, on East Timor's southern coast on Monday, a police officer told AFP on condition of anonymity.
He said the violence was "triggered" by the stabbing of a gang member, who was also a police intelligence agent, in the town yesterday.
"Three people are now in police custody. The security condition there is now under control," the police source said.
A military source who also refused to be identified confirmed the circumstances of the unrest.
Martial arts gangs are common in East Timor, a tiny half-island state which achieved independence from Indonesia in 2002 following a bloody referendum.
United Nations police returned full control of East Timor to the national force in March, more than four years after clashes between rival factions of the security forces threatened to push the country into civil war.
The UN will maintain a presence of up to 1,280 police to support local police until after a presidential election in 2012, when the UN peacekeeping mission plans to withdraw from the southeast Asian state.