The regional public security department put the toll at 140 deaths and more than 800 injuries, according to state-run media.
The death count was expected to climb, according to a regional government spokesman, as reported by China's official Xinhua news agency.
Along the road into the city from the airport, many areas were deserted; residents said police had set up blockades in some areas and were rerouting traffic.
In a rare public display of dissatisfaction, thousands of Uyghurs -- many of whom feel treated as second-class citizens and complain of being discriminated against by the majority Han Chinese -- took to the streets Sunday chanting and screaming, which prompted a police lock-down of the city. iReport.com: Are you there? Share photos, video, commentary
By Monday, police had arrested several hundred participants, the Xinjiang Public Security Department said, according to Xinhua. Police were searching for about 90 other key figures.
Most businesses in the area where the violence took place remained closed Monday, Xinhua said.
But a witness in Urumqi told LEO that, soon after the protest started about 5 p.m., hundreds of protesters "grew into easily over 1,000 -- men, women and children, all ethnic Uyghurs -- screaming and chanting." Police arrived quickly and tried to control the swelling crowd by erecting barriers in the street, but "people pushed them over," the witness said. "They were throwing rocks at passing cars and buses." As the violence escalated, hundreds of riot police arrived, the witness said.
"They used tear gas and fire hoses to disperse the crowd. I saw fire trucks, ambulances, armed personnel carriers and what looked like tanks. I heard random gunshots."Late Sunday, the witness said, Urumqi was in a lockdown, with hundreds of People's Liberation Army soldiers in the streets. He reported seeing riot police chasing protesters into alleys and rounding up many of them.
The witness speculated that the protest, which took place in the predominantly Uyghur-populated Bazaar district, may have been a reaction to racial violence in southern China.
The violence reportedly happened at a toy factory in Guangdong province, where many migrants, including Uyghurs, have moved in search of work. A massive brawl reportedly broke out between workers of Uyghur and Han nationalities. Two Uyghurs reportedly died.
Xinjiang is home to many Uyghurs. China's constitution guarantees ethnic minorities equal rights and limited autonomy. However, ethnic tensions run deep. Minority groups such as the Uyghurs complain that they are subjected to discrimination by the majority Han nationality.
A spokesman for the World Uyghur Congress, a dissident Uyghur group based in Munich, Germany, told CNN that Uyghur people in Urumqi and Xinjiang had told him by telephone that they had seen bodies thrown into military vehicles.
Dilxat Raxit added that tens of thousands of demonstrators had gathered in every Uyghur neighborhood in Urumqi to protest peacefully against what he described as the government's ethnic cleansing in Guangdong Shaoguan.
After about 40 minutes -- during which the crowd shouted slogans, calling the incident in Guangdong Shaoguan a planned ethnic cleansing -- the Chinese military began to crack down by sending more than 50 military vehicles, including tanks, carrying troops into Urumqi.
Uyghurs were ordered off the streets, he said.
Sources in Kashgar said a "massive number" of Chinese People's Liberation Army forces entered that city as well, and that students were ordered to remain inside.
People also were arrested along roads leading to Urumqi, he said.
"According to the Chinese law, people have the right to protest peacefully," the World Uyghur Congress said in an appeal. "We call for attention to this kind of ethnic discrimination."
The government in Xinjiang blamed "foreign forces" for Sunday's rioting.
"The violence is premeditated, organized violent crime," said Nur Bekri, chairman of the Xinjiang Autonomous Region, the equivalent of a governor. "It was instigated and directed from abroad and carried out by outlaws in the country."
Bekri accused the World Uyghur Congress of spreading rumors and inciting anger that led to the rioting, in a speech carried by Xinjiang television.
The World Uyghur Congress is led by Rebuya Kadeer, a successful businesswoman of Uyghur ethnicity who was detained in 1999 and accused of harming China's national security. She was freed on bail in 2005 and was allowed to leave for the United States for medical care.
Bekri accused Kadeer of instigating the unrest via the Internet and said the fight at the Guangdong toy factory was exploited to incite ethnic strife.
"We should bear in mind that stability is to the greatest interest of all people in China, including the 21 million-plus people from all ethnic groups in Xinjiang," he said.
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