A crowd watched as a group of teenagers attacked a German student at a family event yesterday.
Two people were arrested in the incident, which police feared at one stage might develop into a riot.
The police helicopter and at least five cars were sent in to deal with the fight after officers received a number of calls claiming a mass fight had broken out among dozens of youths.
But many of those involved in the incident at the Bank Holiday fair at Beach Green, Lancing, were onlookers, police said later.
One German youth was taken to Worthing Hospital with a suspected broken nose after he was pelted with stones by local youths.
A young woman was arrested for her part in the assault and a young man, believed to be her boyfriend, was arrested for public order offences.
Inspector Russell Ternent of Worthing police said: "It is being looked into whether or not this is a racist attack, which we take very seriously."
The incident will be investigated as part of Operation Columbus, which aims to cut offences by or against foreign language students.
Inspector Ternent said: "There was a group of about 40 students from Germany at the fair, behaving themselves, and a group of local youths saw them and started throwing a few pebbles.
"I wouldn't have thought they knew what nationality they were to begin with. Perhaps they realised when one of the students asked them to stop."
Insp Ternent said the spectators had complicated the job of policing the incident.
"If witnesses have something important to say, it's important that they come forward with details. But let the police do their job and don't obstruct officers by getting too close to the situation."
Any witnesses or anyone with information about the incident should telephone 0845 6070999 and ask to speak to PC Scott Barnes at Worthing.
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