Clinton voices deep concern on Myanmar sectarian unrest
* Clinton urges efforts at national reconciliation
* Houses torched in northwest Myanmar
* EU praises "measured" government reaction
* But rights group says troops targeting Rohingyas
* Curfews on route to tourist beaches
June 12 (Reuters) - U.S. Secretary of State Hillary Clinton has voiced deep concern over sectarian violence in Myanmar, unrest that threatens to endanger democratic and economic reforms in the country after decades of military-ruled isolation.
Clinton and the European Union, which both recently suspended economic sanctions against Myanmar to recognise and encourage its transition to democracy, have appealed to the nation's rulers to calm the situation and bring reconciliation.
Tensions between Buddhists and Muslim Rohingyas, a stateless people, turned violent in Myanmar's northwest over the past week, after the gang rape and murder of a Buddhist woman, widely blamed on Muslims, sparked bloody reprisals.
"The situation in Rakhine state underscores the critical need for mutual respect among all ethnic and religious groups and for serious efforts to achieve national reconciliation in Burma," Clinton said in a statement on Monday.
"We urge the people of Burma to work together toward a peaceful, prosperous, and democratic country that respects the rights of all its diverse peoples."
At the weekend, mobs of Muslims and Buddhists torched houses in Sittwe, the biggest town in Myanmar's western Rakhine State. Hundreds of Rohingyas boarded boats to try to flee into neighbouring Bangladesh but many were turned back.
It is the worst communal violence since a reformist government replaced a junta last year, began to allow political pluralism and vowed to tackle ethnic divisions.
The European Union said on Monday it was satisfied with the "measured" handling of the violence so far by Myanmar President Thein Sein, who has said the unrest could jeopardise the transition to democracy if allowed to spiral out of control.
"We believe that the security forces are handling this difficult intercommunal violence in an appropriate way," said Maja Kocijanic, spokeswoman for EU foreign policy chief Catherine Ashton. "We welcome the priority which the Myanmar government is giving to dealing with all ethnic conflicts."
RIGHTS GROUP CRITICISES GOVT
However, U.S.-based Human Rights Watch criticised Thein Sein's handling of the violence, saying he had effectively ceded control of the situation to the army and that troops had opened fire on Rohingyas since the unrest erupted in Rakhine State, also known by its former name Arakan.
"Deadly violence in Arakan State is spiralling out of control under the government's watch," Elaine Pearson, deputy Asia director at Human Rights Watch, said in a statement on Tuesday.
The group urged the government to allow international journalists, aid workers and diplomats into the area.
"Opening the area to independent international observers would put all sides on notice that they were being closely watched," Pearson added.
EU states suspended most sanctions against Myanmar after it released many political prisoners, allowed opposition leader Aung San Suu Kyi and her National League for Democracy to contest by-elections, and lifted some repressive measures.
They had previously frozen the assets of nearly 1,000 companies and institutions, and banned almost 500 people from entering the bloc.
The United States, which had imposed more stringent and comprehensive sanctions against Myanmar, has also suspended curbs on U.S. investment and the provision of financial services in response to changes in the country.
At least eight people were killed and many wounded, authorities said, after fighting erupted on Friday in the town of Maungdaw, and quickly spread to Sittwe and nearby villages.
Sate-run MRTV announced curfews in three towns, including Thandwe, the gateway to Myanmar's tourist beaches, and Kyaukphyu, where China is building a port complex. The curfews underline the risk to Myanmar's attempts to encourage tourism and foreign investment back into the country.
The United Nations said it had started evacuating staff from the area.
Western firms are keen to help meet Myanmar's vast need for investment in health, telecommunications, housing, energy and other infrastructure after decades of isolation.
The country also has large untapped resources of oil and natural gas and the potential to be a major exporter of rice and wood. Moreover, Myanmar neighbours the world's two biggest emerging markets, China and India.
Buddhists and Muslims have long lived in uneasy proximity in Sittwe, where ethnic Rakhine Buddhists were carrying bamboo stakes, machetes, slingshots and other makeshift weapons at the weekend after Muslims were seen setting houses on fire.
Rohingyas live in abject conditions along Myanmar's border with Bangladesh and are despised by many Rakhine, who belong to the predominantly Buddhist majority.
About 100 Rohingyas tried to flee by boat into Bangladesh but were pushed back on Monday, Bangladesh's border guard said.
Five boats carrying about 200 Rohingyas were pushed back out to sea on Sunday, said Anwar Hossain, a major with the guard.
Rohingya activists have long demanded recognition in Myanmar as an indigenous ethnic group with full citizenship by birthright, claiming a centuries-old lineage in Rakhine State, where they number some 800,000.
But the government regards them as illegal immigrants from Bangladesh and denies them citizenship. Bangladesh has refused to grant Rohingyas refugee status since 1992.
The authorities have blamed Rohingya mobs for the violence. But Rohingya activists and residents accuse ethnic Rakhine of terrorising their communities.
State media said three men had gone on trial on Friday for the rape and murder. (Reporting by Reuters in Sittwe, Nurul Islam in Bangladesh and Sebastian Moffett in Brussels. Writing by Andrew R.C. Marshall and Sebastian Moffett.; Editing by Jason Szep and Mark Bendeich)