Five people were killed and more than 300 injured in a riot in Mongolia's capital among people alleging fraud in a weekend election, the country's justice minister said on Wednesday.

President Nambariin Enkhbayar declared a state of emergency for four days late on Tuesday, after protesters clashed with police and set fire to the headquarters of the ruling party.

At least one foreigner, a Japanese citizen, was among those injured in the rioting, the justice minister told a news conference.

About 700 people were detained for their part in the violence.

The chaos threatens to further delay deals that could unlock vast reserves of coal, uranium and other resources beneath the country's vast steppes and deserts, and are seen as key to lifting the isolated Central Asian state out of poverty.

"The president has declared a state of emergency according to the constitution . from 11:30 p.m. on July 1 for a period of four days," television said.

The state of emergency means protests are banned and authorises security forces to break up protests using force. Central areas have been put under curfew from 10 p.m. to 8 p.m. and alcohol sales are banned over the period.

Riot police fired tear gas and rubber bullets against protesters on Tuesday night, but struggled to bring under control crowds, who threw stones, burned cars and gathered in their thousands in the main square of the capital Ulan Bator to protest against alleged election fraud.

Rioting continued into early Wednesday morning. Witnesses reported hearing gunfire. Conditions calmed at around 3 a.m. after convoys of police and armoured vehicles arrived to disperse rioters, witnesses said.

CHARRED BUILDING

The blaze at the party headquarters had been extinguished, and state television showed MPRP Prime Minister Sanjaagiin Bayar touring the charred building and folding his hands in prayer.

An uneasy calm enveloped the city on Wednesday morning with a heavy police presence guarding government buildings.

Mongolia's election committee has yet to give the final result of Sunday's vote, but preliminary results give the ruling Mongolian People's Revolutionary Party (MPRP) a clear majority in the 76-seat parliament.

The General Election Committee of Mongolia vowed to press on with vote-counting.

"The state of emergency has no impact on the (committee's) work, which is continuing. We are hoping to get results out today," its deputy chief Bayarsaikhan told Reuters.

The leader of the opposition Democratic Party Tsakhiagiin Elbegdorj rejected the results, but international observers say that overall the election was free and fair.

The Democratic Party had called its candidates from around the country to Ulan Bator, where they intended to present details of election fraud.

The US embassy in Ulan Bator said it was "deeply concerned" by the violence and called for both parties to work together.

Analysts and foreign business executives in Mongolia downplayed the violence, saying it was not supported by the majority of Mongolians and describing it as teething troubles for a young democracy.

"The outskirts of Ulan Bator have a lot of poor and frustrated youngsters who would use any pretext to get to streets and participate in any turmoil," said Sumati, from the polling organisation Sant Maral Foundation.

Investors have pinned hopes on a majority government being able to shunt through long-delayed amendments to the Minerals Law and the passage of the draft investment deal that would allow the Gobi desert Oyu Tolgoi copper and gold project to go ahead.

The agreement which developers Ivanhoe Mines and Rio Tinto say would increase Mongolia's GDP by 34 percent, could clear the way for future deals to extract its resources.

Ivanhoe said it had no comment on the rioting.

Although ruled by an unstable coalition government for four years, the country of vast grasslands and deserts is often viewed as a rare example of democracy in Central Asia.

But new election rules that changed the first-past-the-post system to one of multi-member constituencies have led to procedural problems and some confusion over how votes should be counted.