It was a terrifying sight: hundreds of angry, armed men on motorcycles advancing up a dusty street with no one to stop them. Shouting at the top of their lungs, clutching machetes, iron pipes and long bamboo poles, they thrust their fists repeatedly into the air.

The object of their rage: Burma's embattled Muslims.

Gaping residents backed away as the Buddhist mob passed. Worried business owners turned away customers and retreated indoors. And three armed soldiers standing in green fatigues on a corner watched quietly, doing nothing despite an emergency government ordinance banning groups of more than five from gathering.

Within a few hours on Wednesday, at least one person was dead and four injured as the north-east region of Burma became the latest to fall prey to the country's swelling tide of anti-Muslim unrest.

Two days of violence in the city of Lashio have cast fresh doubt over whether President Thein Sein's government can or will act to contain the racial and religious intolerance plaguing a nation still struggling to emerge from half a century of military rule.

Muslims have been the main victims since the violence began in western Rakhine state last year, but so far most criminal trials have involved prosecutions of Muslims, not members of the Buddhist majority.

The rioting in Lashio started on Tuesday after reports that a Muslim man had splashed petrol on a Buddhist woman and set her on fire. He was arrested. The woman was taken to hospital with burns on her chest, back and hands.

A mosque in Lashio destroyed in the attacks. Photograph: Nyein Chan Naing/EPA

Mobs took revenge by burning down several Muslim shops and one of the city's main mosques, along with an Islamic orphanage that was so badly charred that only two walls remained, said Min Thein, a resident contacted by telephone.

On Wednesday fires still smouldered at the ruined mosque, where a dozen charred motorcycles lay on the pavement underneath its white minarets. Troops stood guard. The wind carried the acrid smell of several burned vehicles across town, and most Muslims hid in their homes.

When one group of thugs arrived at a Muslim-owned cinema housed in a sprawling villa, they hurled rocks over the gate, smashing windows. They then broke inside and ransacked the building.

Ma Wal, a 48-year-old Buddhist shopkeeper across the street, said she saw the crowd arrive. They had knives and stones, and came in two separate waves.

"I couldn't look," she said, recounting how she had shut the wooden doors of her shop. "We were terrified."

A couple of hours later, the mobs were gone and two army trucks and a small contingent of soldiers guarded the villa.

"I don't know what to think about it," she said. "More casualties are ... not good for anybody."

The government, which came to power in 2011 promising a new era of democratic rule, appealed for calm.

"Damaging religious buildings and creating religious riots is inappropriate for the democratic society we are trying to create," presidential spokesman Ye Htut said on his Facebook page. "Any criminal act will be dealt with according to the law," he said.

National police said nine people were arrested for involvement in the two days of violence, but did not say if they were Buddhists or Muslims.

After nightfall, authorities could be heard issuing instructions on loudspeakers across the city, reminding residents a dusk-to-dawn curfew was in effect. The voice bellowing into the night said: "You are prohibited from carrying sticks or swords or any kind of weapon."

A local freelance journalist, Khun Zaw Oo, said he was hit on the head with an iron pipe as he photographed mobs ransacking shops. He said he managed to flee but a companion also holding a camera was attacked and badly injured.

Hundreds of people died in Rakhine state last year when clashes between Buddhists and Muslims drove about 140,000 residents, mostly Muslims, from their homes. Most are still living in refugee camps.

This month, authorities in two areas of Rakhine announced a regulation limiting Muslim families to two children. The policy drew sharp criticism from Muslim leaders, rights groups and opposition leader Aung San Suu Kyi.

On Tuesday a US state department spokesman, Patrick Ventrell, said the US opposed coercive policies limiting births, and called on Burma "to eliminate all such policies without delay".

The clashes had seemed confined to the Rakhine region, but in late March, similar Buddhist-led violence swept the town of Meikthila in central Burma, killing at least 43 people. Earlier this month, a court sentenced seven Muslims from Meikthila to prison terms for their role in the violence.

Several other towns in central Burma experienced less deadly violence, mostly involving the torching of Muslim businesses and mosques.

Muslims account for about 4% of Burma's roughly 60 million people. Anti-Muslim sentiment is closely tied to nationalism and the dominant Buddhist religion, so leaders have been reluctant to speak up.

Thein Sein's administration has been heavily criticised for not doing enough to protect Muslims. He vowed last week during a trip to the US that all perpetrators of the sectarian violence would be brought to justice.