The Myanmar government has added Patheingyi to the list of six townships under curfew, placing entire Mandalay under a night-travelling ban since Friday.
Police have arrested and charged some 100 curfew violators under Section 188 of the Penal Code since Friday.
Sources in the Mandalay Region Police said the authorities would open fire if the crowds turned violent.
The expansion of the curfew area was prompted by unruly activities at the funeral of Tun Tun, who was killed in last Wednesday's Mandalay riots.
Following the funeral, a crowd set fire to the burial ground for Muslims on Friday.
Violence reportedly erupted in the countryside area. Markets and shops were closed early due to a rumour about funeral-related mobs.
"We assumed that the mobs wanted the security forces to disperse so they acted like rumour mongers to counter the security measures," said Pol Lt-Colonel Zaw Min Oo from Mandalay region police.
"It is a funeral so we have to allow [it]. We did not know the problem would that big. When the number of the people at the funeral increased, we provided them security.
"We charged the people who set fire at Ayeyeiknyein cemetery and now they are at large. We arrested seven people holding sticks, knives and weapons.
"There were some people who ran away. Now the situation is stable until 10pm. The locals closed their shops early for their safety.
"What I want to tell people is we are carrying out the security. We advise the people not to believe in rumours. Sagaing Police Brigade, ShweSaryan Police Brigade and Palake Police Brigade are cooperating with local police forces."
Locals criticised the government's security plan and want the police to further tighten security.
"The police are trying to control the violence. If they cannot control the violence with rubber sticks, they will open fire to prevent further clashes," Zaw Min Oo said.
"The curfew allows us to fire to control the violence if needed. We have the authority to fire."
Mandalay police have issued arrest warrants for suspected arsonists and rounded up seven suspects involved in unruly activities at the Muslim cemetery.
Police invoked sections 505 (b) and (c) and 254/147 of the Penal Code in a bid to quell Friday's disturbance.
A police commander in charge of the district police force said suspects would face charges for religious desecration, agitating the public, disturbing peace and inciting sectarian conflict.
In regards to curfew-related incidents, a car and a motorcycle parked near a mosque on 80th Street were damaged.
On Friday, some 10,000 mourners took part in the funeral procession for Tun Tun at Ayeyeiknyein (Kyarnikan) cemetery.
Rumours spread that mosques were being attacked in downtown Mandalay, prompting markets and shops to close around 3.00pm.
Police kept a close watch on the funeral. They rounded up rioters at Nan Shay 15th Street, 66th Street and 61st Street.
"Warrants have been issued for those who set fire to the non-Buddhist cemetery," the police commander said.
"Those wreaking havoc and wielding knives and sticks have been arrested after the funeral on Nan Shay 15th Street. We are searching for those who fled the scene."
Of the seven suspects arrested for unruly activities, three men were arrested at the corner of 15th Street and 62nd Street. The other four were apprehended between 63rd Street and 64th Street.
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