Local residents said a mosque and shops owned by Muslims were set on fire.
The clashes began after claims spread that a Muslim man had doused a Buddhist woman with fuel and set her on fire at a petrol station.
The woman was reportedly taken to hospital and a man arrested, reports said.
Recent months have seen a number of clashes between Buddhist and Muslim communities in Burma.
The violence - the extent of which remains unclear - reportedly erupted when police refused to hand over the man accused of setting the Buddhist woman alight to a crowd.
The authorities have imposed a curfew in the town, according to residents.
"Fires have been put out at some places in the town... the situation is under control now," an unnamed official told the AFP news agency.
Wave of violence
In March, at least 43 people - mostly Muslim - died in violence that erupted after an argument at a Muslim-owned shop in the central town of Meiktila.
The owner of the shop and nine other Muslims were imprisoned last month for that outbreak of violence. As yet no Buddhists have been convicted over the Meiktila clashes.
Ethnic violence in Rakhine state last year left nearly 200 people dead and forced tens of thousands of people from their homes.
The conflict that erupted in Rakhine involved Buddhists and Rohingya Muslims, who are not recognised as Burmese citizens.
The communities remain largely segregated in the wake of the violence, with many displaced Rohingya Muslims living in tents or temporary camps.
Human rights groups have criticised Burmese authorities for being complicit in the persecution of the Rohingya.
BBC
