Israeli police closed off the northern coastal city of Acre on Thursday when clashes erupted for the second time in a day between Jews and Arabs.

A local resident said main roads were barred and Israeli helicopters flew over the city, where violence began at midnight on Yom Kippur, the holiest day in the Jewish calendar.

Police fired tear-gas at hundreds of protesting Arabs, he said.

Israeli television broadcast pictures of smashed shop fronts and damaged cars in the ancient port, populated by Jews and Arabs who live close together.

Israeli Prime Minister Ehud Olmert's office issued a statement calling for calm. It said Olmert was being updated on the situation there.

"We must guard vigilantly the ability to live together in coexistence in these towns," the statement said.

Arab witnesses said the clashes began when Jewish youths stoned a car carrying Arabs in the northern coastal city of Acre during the fast, when traditionally all traffic stops in Jewish parts of Israel.

Israeli police spokesman Micky Rosenfeld said the three Arab occupants of the car were confronted by Jewish youths. He said no one was hurt in the clash, which erupted at about midnight.

About 100 cars and 40 shops were damaged by Arab youths who heeded a call from mosques to go out on to the streets, Rosenfeld said. Several Arabs were arrested on Thursday.

"Police moved in quickly to try to calm tensions and removed the car from a closed street in a Jewish neighbourhood when the three people inside were confronted by local residents," Rosenfeld said.

"Officers spoke to local leaders of the Arab community to try to calm tensions but Arab youths went out onto the streets and damaged many cars, shops and street fixtures."

Rosenfeld said police units remained at the scene for the rest of Yom Kippur on Thursday to calm the situation. The fast ended at dusk.

Israeli Arab parliamentarians demanded that police be deployed during Yom Kippur to prevent Jewish youths from starting trouble, the website of the Haaretz newspaper said.

Knesset member Mohamad Barakeh said the incident had less to do with Yom Kippur than a deliberate "escalation of racist speech" ahead of Israeli municipal elections next month.

"We see a great danger in these attacks. They are similar to the pogroms that Jews were exposed to at the hands of the Nazi gangs in Germany," Barakeh told Reuters.