But in follow-up reports on Monday the death toll escalated sharply, with officials saying it was likely to rise further.
The clashes are the deadliest outbreak of ethnic unrest to take place in Xinjiang for several years.
Alim Seytoff, General Secretary of the Uighur American Association in Washington DC, told Al Jazeera he believed many Uighurs had died in the clashes.
"This began as a peaceful protest by young Uighurs," he said, adding that clashes only broke out when armed police and armoured vehicles moved in to forcefully break up the demonstration, opening fire on protesters.
He rejected suggestions from the Chinese government that the World Uighur Congress, a pressure group made up of Uighur exiles, was behind a plot to instigate the violence.
It is common practice for Beijing to blame outsiders for any problems in Xinjiang, as it does with problems in Tibet, Seytoff said.
"The root cause of the problem is really the Chinese government's long-standing repressive policies," he said.
Xinhua said the situation in the city was "under control" on Monday, with police reported to be out in force.
About 800 people are thought to have been arrested in the wake of Sunday's clashes, with police reportedly raiding university dormitories in the hunt for others they believe organised the protest.
Local residents also reported that internet connections in Urumqi were unavilable - a shutdown that is becoming standard practice in areas of China hit by unrest.
One local resident contacted by the Reuters news agency said Urumqi, situated 3,200km west of Beijing, was "basically under martial law".
|A local resident said Urumqi was "under martial law" after Sunday's riot [Reuters]
Xinhua said local officials had ordered traffic off the streets in parts of the city to ensure there was no fresh unrest.
"The facts demonstrate this was controlled and instigated from abroad," an unnamed official said of the riot, according to Xinhua.
The report also said the "unrest was masterminded by the World Uighur Congress" led by Rebiya Kadeer, a Uighur businesswoman who was jailed for years in China before being released into exile in the US.
"This was a crime of violence that was pre-meditated and organised," Xinhua said.
Sunday's protest was originally called as a demonstration over the deaths late last month of two Uighur workers at a toy factory in southern China who were killed in a clash with Han Chinese workers.
China has blamed ethnic separatists and Muslim extremists for stoking unrest in Xinjiang over the past decade.
"There were thousands of people shouting to stop ethnic discrimination... They are tired of suffering in silence"
World Uighur Congress
But critics of Beijing say many Uighurs are angry at what they see as the growing dominance in the region of Han Chinese – China's main ethnic group.
Uighur exile groups have adamantly rejected the Chinese government claim of a plot, saying Sunday's riot was an outpouring of pent-up anger over government policies.
"They're blaming us as a way to distract the Uighurs' attention from the discrimination and oppression that sparked this protest," Dilxat Raxit, a spokesman for the World Uighur Congress in Sweden, told Reuters.
"It began as a peaceful assembly. There were thousands of people shouting to stop ethnic discrimination, demanding an explanation... They are tired of suffering in silence."
In the run-up to the 2008 Beijing Olympic games, Xinjiang was hit by several deadly attacks that Chinese authorities said were the work of "terrorists".
But human rights groups and Uighur activists say China exaggerates the threat to justify harsh controls restricting peaceful political demands.