Baku (AFP) - Two ethnic Armenian troops died in fighting with Azerbaijani forces Friday as the archfoes accused each other of breaching a ceasefire that halted the worst outbreak of violence in decades over a disputed breakaway region.
The latest clashes are the first serious violation of a Moscow-mediated ceasefire which took effect on Tuesday, ending several days of fighting over the Nagorny Karabakh region that claimed at least 90 lives.
The violence has sparked concern of a wider conflict in the strategic location that could drag in regional powers Russia and Turkey.
"Azerbaijan violated a ceasefire overnight" using mortars to shell ethnic Armenian rebel positions in Karabakh, the separatist defence ministry said in a statement, adding that two soldiers were killed.
Armenia accused Azerbaijan of shelling both military and civilian targets on the border.
"The Armenian villages of Karmir, Ttudjur, and Baganis came under Azerbaijani fire," defence ministry spokesman Artsrun Hovhannisyan said in a statement.
Azerbaijan, a mostly Muslim former Soviet republic, said it returned fire after Armenian forces shelled its positions in Karabakh.
"Azerbaijani armed forces responded to Armenian artillery strikes," defence ministry spokesman Vagif Dargahly said.
"Civilian targets (in Azerbaijan) were also shelled by the Armenian forces."
Azerbaijan's defence ministry later said the sides reached an agreement to restore a ceasefire from 3 pm Baku time (1100 GMT).
It said the bodies of dead soldiers would be collected from the battlefield with the help of the Organisation for Security and Cooperation in Europe and the Red Cross.
Armenia-backed separatists seized control of Nagorny Karabakh, which is located inside Azerbaijan's territory but populated mainly by Christian ethnic Armenians, in an early 1990s war that claimed some 30,000 lives.
- 'Positive dynamics' ?
At least 90 people from all sides, mainly servicemen, have been reported killed since a simmering feud exploded into fierce fighting in the early hours of April 2.
The flare up of violence prompted Russia and the West to call on the warring sides to agree an immediate truce.
Azerbaijan's army claimed to have wrested back control of several strategic locations inside Armenian-controlled territory, effectively changing the frontline for the first time since an inconclusive truce ended a three-year war in 1994.
Armenia dismissed the claims of captured territory as "untrue".
The West -- which is keen to reduce Europe's dependence on Russian energy supplies -- has vested interests in the stability of the Caucasus region, which sends Caspian Sea oil and gas to European markets, bypassing Russia.
World leaders have urged Baku and Yerevan to refrain from further violence and to step up efforts aimed at finding a diplomatic solution to the protracted conflict.
Russian Prime Minister Dmitry Medvedev held talks with Armenian President Serzh Sarkisian on Thursday and Azerbaijan's leader Ilham Aliyev on Friday.
"The situation is difficult," Medvedev said during his meeting with Aliyev, adding that he hoped that "peace will be lasting and the sides will be able to continue discussing the settlement (of the conflict) at the negotiating table."
The president of Azerbaijan for his part said that the ceasefire had been restored thanks to Moscow's mediation efforts.
"It is not always respected by the opposing side, but in general we have been seeing a deescalation over the past days and we think that there are positive dynamics," he added.
Russia has sold sophisticated weapons worth hundreds of millions of dollars to both Baku and Yerevan.
Despite a 1994 ceasefire the two sides have not signed a peace deal and sporadic violence along the line of contact often claims the lives of soldiers on both sides.
Energy-rich Azerbaijan, whose military spending exceeds Armenia's entire state budget, has repeatedly threatened to take back the breakaway region by force.
But Moscow-backed Armenia has vowed to crush any military offensive.