People have been left terrified by rumours of more clashes
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Tens of thousands of residents have fled East Timor's capital, Dili, fearing new clashes between former soldiers and police.
The exodus was sparked by rumours of impending fighting that were reportedly spread through mobile phone texts.
A UN official said up to 75% of Dili's 120,000 population had left. But there have been no reports of fresh violence.
Five people were killed in last week's clashes, following the sacking of some 600 soldiers for going on strike.
The soldiers went on strike in March to demand better working conditions.
The government of Friday appealed for calm, telling Dili residents it was safe to return to their homes and go back to work.
'Rampant rumours'
Roads around Dili are reported to have been packed with vehicles containing household valuables, as residents have been heading to the nearby mountains and villages since Wednesday.
"I am forced to go... because of this conflict... It seems there is a desire for revenge," one Dili resident told the AFP news agency.
"I don't necessarily believe these rumours are true, but I see lots of people leaving."
Residents had begun panicking after seeing that some police officers and former soldiers in Dili started sending their families to their home towns, Joao Fernandez, a USAid employee in East Timor, told the BBC News website.
Rumours of impending fighting have grown further as people texted each other using their mobile phones.
Mr Fernandez said that Dili was now "an empty town".
UN's spokeswoman in Dili Donna Pusumano told the BBC World Update programme that the majority of residents had left the city, with many seeking refuge in international missions.
Ms Pusumano said the panic had been caused by "rampant rumours of some retaliation... and a lot of unfounded rumours too, things such as civil war".
"People were terribly frightened," she said, but added that the situation seemed to be "a lot less tense than yesterday [Thursday]".
East Timor's Foreign Minister Jose Ramos-Horta on Friday appealed to the nation to remain calm.
"Democracy is still young in our country and people react fearfully to incidents by leaving the city," Mr Ramos-Horta said in a statement.
In Australia, Prime Minister John Howard said his country would consider sending troops to East Timor if a request was made.
But any such move must be sanctioned by the UN Security Council.
Army complaints
The sacked soldiers, many of them from western districts of the country, originally left their posts because they believed they were missing out on promotion to colleagues from the east, according to one of the protest leaders.
A number of houses and cars were destroyed in last week's riots
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Many of the troops, veterans of the 25-year fight for independence from Indonesia, feel they have not been given the recognition they deserve for their past sacrifices, say analysts.
The government has launched an inquiry into the soldiers' complaints which will be reviewed on a case-by-case basis.
The dismissal of nearly 600 soldiers is a serious blow to the army, which numbers only about 1,400 personnel, analysts say.
A recent UN report said that although East Timor had made some impressive gains in recent years, it also had deeply entrenched problems and is the poorest country in the region.
East Timor officially gained independence in 2002.
Your comments:
Dili is like a ghost town. Government offices have virtually shut down. Many families have left for the hills and the districts and won't be back until the situation is resolved. All the rumours don't help and only make people more frightened.
Matt Fossey, Dili, East Timor
Dili is shouldn't be like this. This is not what we, the Timorese people have fought for more than 24 years. We wanted an independence for this country that would be run by a fair government. A government that respects the people, traditional values and delivers the most important fundamental issues in East Timor quickly enough. Respect and honour the independence fighters who are now abandoned and forgotten. That's why the people take an opportunity like this to destroy. Current government doesn't really do enough to respond to the reality. Instead they wait in ignorance until it things become out of control.
Pedro Laurentinno da Silva, Dili, East Timor
While the situation is quite serious, the extent of the exodus from Dili may have been exaggerated, if reports from Timor Leste's foreign ministry are accurate. However, the exodus follows the pattern of the past. When the TNI invaded in December 75, thousands fled to the mountains and remained there for two years or so. That also happened in September 1999 during the TNI led violence. This time the situation is far from irretrievable, but it demands urgent attention. The problems within the Defence Force are not unfamiliar in new nations where independence was secured by means of armed struggle. In East Timor unfortuantely the formation of the Defence force did not get under way unti less than a year before independence in May 2002 There is clearly a case for a UN peacekeeping force presence to be resumed, as had been recommended by Kofi Annan almost a year ago.
James Dunn, Melbourne Australia