By Mubasher Bukhari

LAHORE, Pakistan Paramilitary troops have cordoned off a Christian settlement in eastern Pakistan where a Muslim mob vandalised and torched several churches and scores of houses after accusing two of its residents of desecrating the Koran, police and witnesses said on Thursday.

The attack took place in Jaranwala in the industrial district of Faisalabad on Wednesday, and continued for more than 10 hours without any intervention by police who were at the scene, residents and community leaders said. Police denied the accusation, saying security forces had prevented an even worse situation.

The rioters were demanding that the two accused, who had fled their homes, be handed over to them.

The residents said thousands of Muslims led by local clerics were carrying iron rods, sticks, knives and daggers during the rioting.

A provincial government statement said paramilitary troops were deployed to aid the police to control the situation.

The troops have cordoned off the Christian colony, blocking all entry and exit points with barbed wire, according to a Reuters TV cameraman.

Over 100 people suspected of being involved in the rioting have been arrested, the government statement said, adding that an inquiry has also been ordered into the incident.

Blasphemy is punishable by death in Pakistan and although no one has ever been executed for it, many accused people have been lynched by outraged crowds. A former provincial governor and a minister for minorities have also been shot dead because of blasphemy accusations.

Rights groups say accusations of blasphemy are sometimes used to settle scores. Hundreds of people are languishing in prison after being accused of the crime because judges often put off trials, fearing retribution if they are seen as being too lenient, they say.

The United States was "deeply concerned that churches and homes were targeted," State Department Deputy Spokesperson Vedant Patel said on Wednesday.

(Writing by Asif Shahzad; Editing by Raju Gopalakrishnan)