"It shows Afghan institutions are not yet ready to handle protests... That must be made better," Karzai said on Wednesday during a visit to Nato headquarters in Brussels.
Four Afghan protesters were killed and about 50 wounded, a health official said, as thousands took to the streets in the eastern city of Jalalabad in reaction to a report in Newsweek magazine of the alleged desecration at the US base in Cuba, where 500 prisoners captured in Afghanistan are held.
A witness said more than 5000 took part in protests in the city, once a stronghold of the former ruling Taliban government, 130km east of the capital Kabul.
Protesters set fire to a governor's office after police fired to break up a rowdy crowd. Diplomatic missions and UN buildings were also attacked.
Demonstrators on Tuesday carried banners denouncing the United States and Karzai. But the US-backed leader said the protest did not show that he had underestimated hostility towards the United States and its troops in the country.
"It is not anti-US sentiment. It is a protest. It is a manifestation of democracy," Karzai said.
"It is not anti-US sentiment. It is a protest. It is a manifestation of democracy"
According to witnesses, police fired their weapons as the crowd rampaged through the centre of the city chanting slogans including "Death to America" and burning effigies of US President George Bush.
The mob in the eastern city of Jalalabad tried to set fire to several key buildings, including the offices of several aid agencies, the governor's house and the Pakistani consulate, police and witnesses said.
Protests also spread to the southeastern city of Khost, where about 1600 university students took to the streets, witnesses said. The demonstrations there ended peacefully.
Abuse of Quran
The demonstrations were sparked by radio and television reports about the alleged abuse of the Quran at Guantanamo, demonstrators said.
"After people heard the news that a Quran was set on fire and was thrown in the toilet in Guantanamo by US soldiers they were angered and that sparked the demonstration," car mechanic Mohammed Nadir, 24, said.
Copies of the Quran were said to
be desecrated in Guantanamo
The reports about the abuse of Islam's holy book have also angered Washington's close ally Pakistan, a mostly Muslim country.
Pakistan's Foreign Ministry said it was deeply dismayed and demanded an explanation, while parliament and former cricket captain-turned politician Imran Khan urged Washington to apologise.
The United States commands a force of about 18,300 - including 8000 Nato troops - fighting remnants of the Taliban and trying to track down Osama bin Laden, wanted for directing the 11 September 2001 attacks on US targets.
Nato also leads a separate 37-country force of 8400 in the capital Kabul and the north. It is committed to expanding its presence to the west this year and then to the south.
Nato Secretary-General Jaap de Hoop Scheffer said after talks with Karzai the alliance expected to remain in the country long past the parliamentary elections due on 18 September.
"Nato has always realised together with its partners that this is a long-term commitment. This is not yet the moment to say Afghanistan can be entirely on its own," de Hoop Scheffer told a news briefing.