Growing violence
 
The shooting happened at a rally for Gusmao who is campaigning to be prime minister and was the second death in a week since campaigning began for the June 30 parliamentary elections.
 
The Australian-led international security force had been deployed to the area.
 
Last week, an East Timorese man died from injuries he received after a grenade exploded during gang fighting in Dili.
 
East Timor's political parties last month signed an accord denouncing violence during the current election campaign.
 
The parliamentary poll is widely tipped to be a contest between Fretilin, the historical party of independence, and Gusmao's new CNRT party.
 
Gusmao, East Timor's independence hero, is contesting the poll in a bid to become the country's next prime minister and complete a job-swap with Jose Ramos-Horta, the former prime minister who was recently elected president.
 
After the attack, Gusmao called "on all people of our young nation to give up violence".
 
"With violence we only hurt ourselves, our country, and those that we love. We must unite to rebuild our nation on a foundation of peace and understanding," he added.
 
Rebel denies asylum
 
Separately, fugitive rebel leader Alfredo Reinado sent a letter to the media on Sunday denying reports that he had flown to Indonesia to seek asylum.
 
He reiterated that he was prepared to surrender to the authorities but first sought a halt to military operations hunting him.
 
The manhunt was launched by the government in February after he and his men attacked several border police outposts and fled with dozens of weapons.
 
He added that while he welcomed any attempt to hold dialogue with the authorities, it should follow a procedure "that will not hurt or take my life or those of my men".