DILI, Indonesia (AP) _ Thousands of East Timorese rampaged through the streets of Dili on Sunday, looting shops, burning cars and smashing windows in protests against Indonesian rule.

No injuries were reported in the riot, which followed a small, peaceful parade demanding independence for East Timor, a former Portuguese colony annexed by Indonesia.

Hours earlier, about 40 pro-independence activists shouted ''Viva Bill Clinton'' and ''Free Timor'' at a noisy but peaceful demonstration for human rights and independence in Dili.

The incidents followed the third anniversary Saturday of the massacre of unarmed civilians by Indonesian troops on Nov. 12, 1991.

They also coincided with Saturday's sit-in by 29 East Timorese students, who climbed over a fence and sat in the grounds of the American Embassy in Jakarta, 1,500 miles to the west. The unrest came ahead of President Clinton's arrival late Sunday for a summit of the 18-member Asia-Pacific Economic Cooperation forum on Tuesday.

As demonstrators spread through the East Timorese capital burning debris, stoning police and breaking store windows, hundreds of Indonesian riot police cordoned off the capital of 30,000 inhabitants. The rioters were armed with clubs, bricks, rocks and bottles.

At one point, about 150 riot police charged the protesters, but turned and fled when the youths stoned them and beat them with clubs.

At least 300 youths overran the Turismo Hotel, where many foreign reporters were staying. The protesters, armed with clubs and sticks, screamed, threw rocks, torched a car and made off with beer bottles, said Associated Press photographer Jeff Widener.

Irawan Abidin, director of information at the Indonesian Foreign Ministry, said he understood the violence stemmed from a brawl in a Dili market on Saturday that reportedly left three dead.

One Timorese was stabbed to death by a group of Indonesians and two Indonesian youths were killed in retaliation Saturday, the Portuguese news agency Lusa reported.

A chronic source of friction is the feeling among East Timorese that Indonesians are moving in, taking over businesses and jobs.

The students who sat in at the American embassy were still on the embassy grounds Sunday morning, 24 hours later. Secretary of State Warren Christopher expressed sympathy for them, and the embassy said it would not force them to leave.

The peaceful demonstrators in Dili called on Clinton to help the people of East Timor, which was invaded by Indonesia in 1975 as Portugal pulled out and annexed the following year. The United Nations never recognized the annexation, although the United States has.

''Clinton must help East Timor. We want human rights and independence,'' said one protester who spoke on the condition of anonymity.

In Sunday's peaceful protest, demonstrators carried anti-Indonesian banners and the flag of the outlawed Fretlin rebel group, and demanded the release of Fretlin's jailed leader.

Their protest followed an early morning Mass of about 700 worshipers conducted by East Timor's Roman Catholic bishop, Carlos Filipe Belo, at his residence on Dili's palm-fringed waterfront.

The massacre anniversary passed without incident in Dili on Saturday. Only a few police and no soldiers were on the streets where it appeared to be business as usual.

Commemoration of the massacre was limited to small and low-key church services. Few people visited Santa Cruz cemetery - the hot and dusty graveyard where the 1991 shootings took place. A government inquiry said 50 people were killed, 91 were injured and 57 unaccounted for. Independent sources say more than 200 died.

Two American journalists who were present at the cemetery massacre were arrested Saturday while trying to enter East Timor to cover the anniversary.

Allan Nairn of Vanity Fair told the AP by telephone that he and Amy Goodman of Pacifica Radio were taken off a bus by Indonesian soldiers. They were being held at a military base in Kupang in western Timor and were told a senior government official was flying out to question them.

''I don't understand why they were detained, there should not be any problem,'' said Abidin, the Foreign Ministry spokesman.

Human rights groups have accused Indonesia of widespread abuses in East Timor since Indonesia invaded.

East Timor's recently appointed military commander Col. Kiki Syahnakri admitted in an interview that the army had made heavy-handed mistakes in the past, but laughed at accusations of regular human rights abuses.

''We are being watched by the army all the time,'' said one activist who spoke on condition of anonymity.