( Reuter )- Independence protesters burned shops and cars in the Tibetan capital Lhasa on Friday and Chinese police were reported to have shot dead at least two people, in the fiercest unrest in the region for two decades.
China accused supporters of the exiled Dalai Lama of "masterminding" the uprising, which shatters its carefully-cultivated image of national prosperity and harmony in the buildup to the Beijing Olympic Games.
A spokesman for the Tibetan spiritual leader called the allegation "absolutely baseless." The Dalai Lama earlier appealed to China to stop using force and begin dialogue with Tibetans. Similar protests in the past have been crushed by security forces with gunfire and mass arrests.
Peaceful marches by Buddhist monks in recent days have given way to angry crowds confronting riot police.
"Now it's very chaotic outside," an ethnic Tibetan resident said by telephone. "People have been burning cars and motorbikes and buses. There is smoke everywhere and they have been throwing rocks and breaking windows. We're scared."
Radio Free Asia, quoting witnesses, said Chinese police fired on protesters, killing at least two. A source told Reuters that two Tibetans were shot dead near the Ramoche Monastery near the capital, Lhasa. The deaths could not be further verified.
Residents near the Jokhang temple in old Lhasa said they had seen lines of riot police, but none spoke of gunfire. "We are waiting to see what will happen tomorrow," said an ethnic Tibetan woman. "It could get much worse."
Up to 400 protesters gathered around a market near the Jokhang temple early on Friday and were confronted by about 1,000 police, according to a witness cited by Matt Whitticase of the Free Tibet Campaign in London.
An ethnic Tibetan resident said some protesters shouted for independence from China. "It's no longer just the monks. Now they have been joined by lots of residents," the man said.
China's role in Tibet has become a focus for its critics in the run-up to the Olympics, with marches held worldwide this week to mark the 49th anniversary of a failed uprising against Beijing's rule that led to the Dalai Lama fleeing to India.
Those marches apparently galvanized Buddhist monks to take to Lhasa's streets, defying a heavy police presence and reports of lockdowns at several monasteries.
"These protests are a manifestation of the deep-rooted resentment of the Tibetan people under the present governance," the Dalai Lama said in a statement.
"I therefore appeal to the Chinese leadership to stop using force and address the long-simmering resentment of the Tibetan people through dialogue with the Tibetan people."
Chinese authorities were uncompromising. "The government of Tibet Autonomous Region said Friday there had been enough evidence to prove that the recent sabotage in Lhasa was 'organized, premeditated and masterminded' by the Dalai clique," Xinhua news agency reported.
"The violence, involving beating, smashing, looting and burning, has disrupted the public order, jeopardized people's lives and property, an official with the government said."
But China was "fully capable of maintaining social stability" in Tibet, the official said.
A spokesman for the Dalai Lama, contacted in the Indian town of Dharamsala, the major centre for Tibetan exiles, said of the allegation against him: "This is absolutely baseless and his holiness has made his stand very clear."
The protests present hard choices for President Hu Jintao, who was Communist Party boss in Tibet in 1989 when China imposed martial law to quell anti-Chinese protests.
The eruption of discontent has become a diplomatic issue, with the United States and European Union urging Beijing to avoid a harsh response.
U.S. ambassador to China Clark Randt told senior Chinese officials of Washington's concern over the violence in Lhasa, State Department spokesman Sean McCormack said.
"He took the opportunity, because of what was going on in Lhasa, to urge restraint on the part of the Chinese officials and Chinese security forces," McCormack told reporters.
The devoutly Buddhist Tibetan people of the vast mountainous region have won international sympathy, but virtually no international recognition of claims to sovereignty, since Chinese troops invaded in 1950.
Nine years later came the failed uprising and the flight of the Dalai Lama and thousands of his supporters into exile.
A Han (majority) Chinese resident of Lhasa said the protests were being directed at the city's Han Chinese population, which has mushroomed in recent years with China's economic boom. "The Han Chinese are really scared," he said.
The demonstrations in Lhasa spilled over into at least one other ethnic Tibetan area of China.
Hundreds of monks from the Labrang monastery in the northwestern province of Gansu led a march through the town of Xiahe, the Free Tibet Campaign said, citing sources in Dharamsala in India, home to Tibet's government-in-exile.
About a dozen Tibetans living in exile in India were arrested when they tried to storm the Chinese embassy in New Delhi late on Friday.
The International Campaign for Tibet said it strongly condemned the "imposition of martial law," though there was no word from China that martial law had been imposed.