An incident described by US forces in Afghanistan as a "complex ambush" has left at least eight civilians dead.
Local people accused the US soldiers of targeting civilians
The incident occurred on the road from the eastern city of Jalalabad to Pakistan when a suicide bomber targeted a convoy, sparking a fire fight.
US officials initially said 16 people had been killed. They did not explain the lower, revised death toll.
Thousands of local people took to the streets, accusing the Americans of deliberately firing on the civilians.
Separately, Nato said two British soldiers had been killed in fighting in southern Afghanistan.
The US military said a minibus containing explosives was driven at the convoy, injuring one soldier.
US troops were then attacked from several directions and returned fire in defence of the patrol.
Thousands of people gathered to demonstrate against the shooting, shouting "Death to America, Death to Karzai", referring to the Afghan president, and blaming the US patrol for shooting passers-by.
US military spokesman Maj William Mitchell said: "We certainly believe it's possible that the incoming fire from the ambush was wholly or partly responsible for the civilian casualties."
However, Mohammad Khan Katawazi, chief of Shinwar district, said the US troops treated everyone as a potential attacker even if they had no evidence.
One injured civilian, Tur Gul, told the Associated Press news agency: "They opened fire on everybody, the ones inside the vehicles and the ones on foot."
"When we parked our vehicle, when they passed us, they opened fire on our vehicle," said Mohammad Ishaq, 15, who was also hit by bullets.
The BBC's Alastair Leithead in Kabul says there has been a huge increase in the number of suicide attacks over the past 12 months, but a coordinated ambush is relatively rare.
He says there have also been other demonstrations in the same province, Nangarhar, recently, mainly at opium poppy eradication by government officials.
The two British servicemen killed in southern Afghanistan died in the Sangin area of Helmand province on Saturday.
Twenty foreign soldiers have been killed in Afghanistan so far this year.
Nato fears that Taleban violence will escalate in several areas of Afghanistan as the winter snows thaw.
Nato commanders have said they need more soldiers to tackle the expected spring offensive.
Last Tuesday at least nine people were killed in a suicide bombing at the main US base in Afghanistan, Bagram near Kabul, during a visit by US Vice-President Dick Cheney.