Berlin (CNN) German Chancellor Angela Merkel has condemned violent anti-migrant protests in the state of Saxony, saying "hate in the streets" has no place in the country.

German police fired water cannons and used pepper spray in the city of Chemnitz on Monday night during a second day of protests, as 6,000 far-right demonstrators, some chanting neo-Nazi slogans and giving Hitler salutes, clashed with counter-protesters over the fatal stabbing of a 35-year-old German man in a brawl.

German media accused police of being unprepared for Monday's protests.

Two men -- an Iraqi and a Syrian -- have been arrested in connection with the stabbing.

"What we have seen is something which has no place in a constitutional democracy," Merkel said Tuesday in Berlin, during a joint news conference alongside Croatian Prime Minister Andrej Plenkovic.

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