The increasingly bitter row over the publication of a series of controversial cartoons of the Prophet Mohammad reached a new intensity last night as protesters set fire to the Danish and Norwegian embassies in Syria.

  With police signalling that they will launch an investigation into the behaviour of protesters in London who called for those insulting Islam to 'be beheaded', protesters in the Syrian capital, Damascus, defied tear gas and water cannon to enter the Danish embassy and replace that country's flag with another which read: 'No God but Allah, Mohammad is His Prophet.'

  Last night the Danish embassy, which was empty when attacked, was a charred hulk. The Norwegian embassy was still burning. As well as the dramatic scenes in Damascus - not known for its Islamic militancy - rising tensions among Muslims over the publication of 'blasphemous' cartoons in Denmark threatened to boil over across the globe.
· In London, 700 Muslims held a second day of angry protests outside the Danish embassy, many holding placards glorifying the events of 7 July and 9/11.
· Metropolitan police sources told The Observer that arrests could follow this week after investigations of the behaviour on Friday of some protesters who demanded the 'massacre' of 'those who insult Islam'. They may have breached laws against inciting hatred or terrorism.
· Groups representing British Muslims appealed for calm, saying the demonstrations and violence had gone too far.
· In Iran, the President told his commerce minister to consider cancelling trade contracts with European countries whose newspapers used the cartoons.
· The Hamas leader, Dr Mahmoud Zahar, told the Italian daily Il Giornale that the cartoons were an offence that should be punished by death.

Last week hundreds of Palestinians marched through the streets of Gaza City, some storming European-owned buildings and burning German and Danish flags, while in Nazareth 6,000 people held the first protest on Israeli soil against the publication of the cartoons.

People at a demonstration in Iraq, organised by followers of radical Shia cleric Muqtada al-Sadr, issued a statement condemning the Danish, Norwegian and French newspapers that ran the drawings and called for the withdrawal of Iraq's ambassadors from those countries.

The Foreign Secretary, Jack Straw, who had previously criticised newspapers for reprinting the cartoons, condemned the escalating violence last night. 'The violence is totally unjustified and to be condemned. I am glad that the British Muslim leaders have been very responsible.' He said Islam was a tolerant faith but 'you have people who are hotheaded and who will say they are adherents to a religion' in any faith.
Angela Merkel, the German Chancellor, added her voice to international appeals for calm. 'I can understand that religious feelings of Muslims have been injured and violated but I I feel it is unacceptable to see this as legitimising the use of violence,' she said.

Politicians from the Polish Prime Minister Kazimierz Marcinkiewicz to the European Union's foreign policy chief, Javier Solana, expressed disapproval of the decision to publish the cartoons.

Last night the Metropolitan police signalled that they wanted to arrest people suspected of stirring up racial hatred during the demonstrations outside the Danish embassy in London. It is understood that a number of those identified by police last week were known to hold militant views. These included members of Hizb ut-Tahrir, the radical organisation banned in a number of European countries and Anjem Choudary, a key ally of Sheikh Omar Bakri Mohammed, the exiled leader of the radical Islamic group al-Muhajiroun who described the 7 July bombers as 'the fantastic four'.

Choudary warned that the row over the cartoons was set to escalate. 'The Danish journalists and others who followed suit, I don't think they're going to be able to live peacefully from now on,' he told The Observer. 'A fatwa will be issued, there will be people around the Muslim world who will take that very seriously and what happened to Salman Rushdie is going to happen to the journalists.'

Choudary's comments came as Britain's leading Muslim body called for the protesters to be prosecuted. Inayat Bunglawala, spokeswoman for the Muslim Council of Britain, said: 'The Metropolitan police should now consider all the evidence they have gathered from the protests to see if they can prosecute the extremists. It is time the police acted, but in a way so as not to make them martyrs of the prophet's cause, which is what they want, but as criminals. Ordinary Muslims are fed up with them.'

Kurshid Ahmed, chairman of the British Muslim Forum, which represents more than 600 British mosques, said: 'The reaction and demonstration by some elements within our community are not reflective of who we are.'

Azhar Ali, of Labour's National Policy Forum, said: 'My fear is some militant organisations will use this incident to propagate hate and this serves to act as a recruiting sergeant for their causes.'