DILI, April 24 (Reuters) - Two members of East Timor's rival martial arts gangs were killed on Thursday in another bout of violence that has beset the young, impoverished nation, police said.

One of the victims was decapitated in a revenge attack that followed the killing of a rival gang member in the eastern district of Baucau, said local police detective chief Rogerio Gueterres.

"We are searching for 10 perpetrators who have been identified," Gueterres said.

The former Portuguese colony plunged into chaos in 2006 after the sacking of 600 rebellious soldiers triggered violence that killed 37 people and drove 150,000 from their homes.

Foreign troops had to be brought in to restore order and security has improved, although sporadic violence, vandalism and arson persist, with an unemployment rate of around 50 per cent helping fan a gang culture among bored youths.

Indonesia annexed East Timor in 1975. East Timor voted for independence from Indonesia in a violence-marred referendum in 1999. It became fully independent in 2002 after a period of U.N. administration. (Reporting by Tito Belo; Writing by Ahmad Pathoni; Editing by Sugita Katyal)

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