The German chancellor, Angela Merkel, has condemned two days of far-right street violence that has left several people injured, which flared up after a Syrian and an Iraqi were accused of killing a German man on Sunday.

Some far-right protesters were accused of hunting foreigners in street mobs in the eastern city of Chemnitz, while others were seen with Nazi-linked banners and giving the outlawed straight-arm salute as demonstrations went into their second day.

“Such riotous assemblies, the hunting down of people who appear to be from different backgrounds or the attempt to spread hate in the streets, these have no place in our country,” Merkel’s spokesman, Steffen Seibert, said on Monday.

Marauding far-right mobs assaulted people they believed to be immigrants, according to reports by Agence France-Presse. The local police chief said one Syrian and one Afghan teenager were attacked in separate incidents, though neither was seriously hurt.

According to AFP, police said pyrotechnics and other objects hurled from both sides left several people requiring hospital treatment. Officers moved in with water cannon and urged the crowd to remain calm.

Rightwing supporters protest after a German man was stabbed last weekend in Chemnitz. The banner reads: “Criminal foreigners out” Photograph: Matthias Rietschel/Reuters

Seibert told reporters in Berlin that the violence had no place in Germany. “People ganging up, chasing people who look different from them or who come from elsewhere ... is something we won’t tolerate,” he said. “This has no place in our cities and I can say for the German government that we condemn this in the sharpest possible manner.”

Hundreds of riot police worked on Monday to keep the noisy crowd of mostly men, who were chanting slogans against “criminal foreigners” and waving German national flags, apart from more than 1,000 anti-fascist counter-protesters.

The far-right demonstrators chanted: “We are the people”, as well as the Nazi-era term “luegenpresse” (lying press). They displayed placards that read “stop the refugee flood” and “defend Europe”, the latter adorned with an image of an automatic rifle.

Some carried banners or insignia of the far-right Alternative für Deutschland party (AfD) and neo-Nazi NPD parties and other extremist groups, while a handful delivered the illegal right-handed Hitler salute, said police.

Their opponents, separated by a police line, yelled “Nazis, get out” and held up banners that read: “Rule of law, not vigilante justice.”

The local prosecutor, Christine Muecke, said the killing of the 35-year-old German man, which sparked the violence, stemmed from a verbal confrontation that escalated after a street festival. Two other men aged 33 and 38 werehospitalised with severe injuries, police said.

Two men were taken into custody: a 22-year-old Syrian citizen and a 21-year-old Iraqi citizen, and both were held on suspicion of manslaughter, Muecke said. She refused to provide more details about the suspects or the victim, the Associated Press reported.

The mayor of Chemnitz, Barbara Ludwig, said she was horrified by Sunday’s demonstrations. She told the regional broadcaster MDR: “The fact that people can agree to meet … run through town and threaten people is bad.”

Asked about an apparent call for vigilante action by a politician from the AfD, Seibert said it was up to the legal system to deliver justice. Markus Frohnmaier had tweeted: “If the state can no longer protect the citizen, then people will go on the streets and protect themselves.”