BEIJING, Sept 4 (Reuters) - Thousands of Han Chinese and members of the Muslim Hui ethnic minority group clashed over a dispute in north China, resulting in one death, a Hong Kong human rights group said on Tuesday.

Relations between the Han, who make up more than 90 percent of China's 1.3 billion population, and the 10-million-strong Hui Muslims have long been sensitive.

Huis complain about offences to their religion and customs and marginalisation, while Han Chinese resent the preferential policies Hui and other ethnic minorities, such as Muslim Uighurs, Tibetans and Mongols, receive.

The Aug. 17 clash started when a young Hui man was caught stealing and beaten up by Han Chinese in Shimiao township in Huimin county in the coastal province of Shandong, the Information Centre for Human Rights and Democracy said.

Angry Hui Muslims stormed the commercial street in Shimiao, looting shops, smashing property and fighting Han Chinese, the group said in a faxed statement. Four police vehicles were damaged.

"At least one Muslim was killed and more than 20 Hui and Han people injured," it said, adding hundreds of armed police were still guarding the area.

A propaganda official with the Huimin county government said "there was such an incident" when reached by telephone.

"It has been resolved," the official told Reuters. He would not confirm the death and other details and declined to give his name.

In December 2000, three Hui men were arrested for demonstrating against a Han Chinese shop that claimed to sell "halal pork" in Shandong's Yangxin county, near Huimin, a huge insult to Muslims who are forbidden from eating pork.

The arrests drew hundreds of fellow Hui Muslims from the neighbouring Hebei province and police opened fire and shot dead six of them when attempts to block them from entering Yangxin sparked a clash.

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