By Afet Mehtiyeva

Sept 10 2009

* Nagorno-Karabakh authorities deny report * Tensions rising with
Armenia-Turkey thaw

(Updates with Turkish reaction)

BAKU, Sept 10 (Reuters) - Azeri media said five Armenian soldiers
were killed on Thursday in a clash with Azerbaijan's forces near the
disputed region of Nagorno-Karabakh, but the rebel territory dismissed
the report.

The Azerbaijan Defence Ministry declined to comment.

Tensions in the region are rising as Armenia and close Azeri
ally Turkey make progress towards opening their joint border and
establishing diplomatic relations, angering oil-producing Azerbaijan.

Azerbaijan's ANS Press said the fight took place in the Agdam district,
next to Nagorno-Karabakh, which threw off Azeri rule in the early
1990s with Armenian backing.

A spokesman for the Nagorno-Karabakh Defence Ministry said the report
was "Azeri propaganda".

Agdam is one of seven Azeri districts surrounding Nagorno-Karabakh
and is held by Armenian forces.

Clashes are common between forces manning the frontline. The last
fatal exchange was in January, when Azerbaijan, which supplies oil
and gas to the West, said it had killed three Armenian soldiers.

Turkey, which is on the verge of an historic deal to restore ties
with Armenia, said it was seeking details of the report. "If the
report would be confirmed, it would become a source of concern,"
Foreign Ministry spokesman Burak Ozugergin said.

Christian ethnic Armenians, backed by Armenia, fought a war in the
1990s to end mainly Muslim Azerbaijan's control over mountainous
Nagorno-Karabakh. An estimated 30,000 people were killed and a peace
accord has never been reached.

Mediators from the United States, France and Russia say they are
close to a breakthrough in negotiations between Armenian President
Serzh Sarksyan and his Azeri counterpart Ilham Aliyev.

Turkey closed its frontier with Armenia in 1993 in solidarity with
Azerbaijan, which now fears losing leverage over Armenia in the
conflict over Nagorno-Karabakh if the border is reopened.

Turkey and Armenia said last month they had agreed to establish
diplomatic ties and open the border. Their presidents are due to sign
the accords in mid-October, before submitting them to the Turkish
and Armenian parliaments for approval.

Under the deal, the border should reopen within two months of
ratification, possibly by New Year. (Additional reporting by Hasmik
Lazarian in Yerevan, Matt Robinson in Tbilisi and Zerin Elci in
Ankara; writing by Matt Robinson; Editing by Mark Trevelyan).