Activists accused the police of using live ammunition to control the biggest anti-government protest since President Omar Hassan al-Bashir announced a cut in fuel subsidies and other austerity measures.
Buthina Mohamed Ahmed, a spokeswoman for the South Darfur state, which includes Nyala, declined to say whether live rounds had been fired, saying only an investigation had been launched, Reuters reports.
Sudan has been mired in an economic crisis since South Sudan seceded a year ago, taking with it most of the crude oil production that is the lifeblood of both economies.
More than 1,000 people, mostly students, hurled rocks at police and blocked roads in the market area of Nyala, Darfur's biggest town, to protest against fuel price increases, witnesses said. Several buildings were damaged.
"Police were forced to act and exercised the minimum of force needed to control the situation, defend themselves and...protect properties which led to the death of eight citizens," police said in a statement on state news agency SUNA.
"A number of people were wounded, among them 24 officers, three of them seriously," the statement said, without saying whether police had used live ammunition. Several people had been detained, it added.
Protesters burned tyres in several streets and chanted "No to high prices" and "People want to change the regime", witnesses said.
One witness said he saw around 15 injured people being treated in hospital, some of them bleeding.
TARGET SECURITY FORCES
Police said protesters had "directly targeted" the security forces and set police stations, government buildings and petrol stations and a pharmacy on fire, SUNA said.
Sudan has avoided an "Arab spring" like Egypt or Tunisia but discontent is growing with Bashir's 23-year rule.
Until Tuesday, protests against the austerity measures had mostly petered out after a security crackdown and the start of the Muslim fasting month of Ramadan almost two weeks ago, when most people stay indoors until sunset.
Some 2,000 people have been detained since mid-June, Amnesty International and Human Rights Watch said in a report this month, citing Sudanese activists.
Sudan's loss of oil revenue has left it with a large budget deficit and rising prices for food and other goods, many of which are imported.
The insurgency in Darfur began in 2003, when Darfuris complaining of neglect by the central government took up arms.
The level of violence has subsided, but law and order have collapsed in many parts of the vast territory, and clashes between rebels and government forces persist.
South Darfur Governor Hamad Ismail accused unnamed Darfur rebel groups of having supported and stirred up the protesters, SUNA said.
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