Rioters from both sides hurled rocks at each other and the police used tear gas to disperse them in a second night of clashes on Thursday night, according to local media.

The English-language Jerusalem Post newspaper said that Arab protesters chanted "death to the Jews" while the Haaretz newspaper reported that the Jews chanting "death to the Arabs".

Motorist attacked

Unrest erupted on Wednesday when an Arab motorist drove into a neighbourhood where Arabs and Jews live, playing his car stereo loudly as ceremonies marking Yom Kippur were under way, Rosenfeld said.

A group of Jewish youths assaulted the Arab driver accusing him of deliberately disrupting the sanctity of Yom Kippur, a day when observant Jews are not allowed to drive.

"Rumours then spread out, namely from mosques, claiming that the motorist had been killed, prompting several hundred Arabs to take to the streets," Rosenfeld said.

Police used tear gas against rival Jewish and Arab protesters [AFP]

He said that about 100 cars and 40 shops were damaged before roadblocks were set up to dvide the two sides.

Police said that two protesters and a police officer were slightly injured during the two nights of violence, while eight Arabs and four Jews were detained.

Football matches planned for the weekend and an annual theatre festival that was scheduled to be held next week were cancelled.

"The atmosphere in the city is not one that is right for a festival," Albert Ben-Shushan, the festival's director, told Israel's Army Radio. "When it all ends, and fades, and the dust settles, we'll decide."

But some MPs criticised the decision to call off the festival, which brings thousands of visitors to acre and is a major boost for local businesses.

"It  is an expression of co-existance in Acre," Ophir Pinez-Paz, who heads the Knesset's Internal Affairs Committee, said. He insisted that the festival should be held "despite the events and maybe because of them".

The ancient port of Akko is populated by both Jews and Arabs who live in adjacent and some mixed neighbourhoods.