(Adds African Union)

By Tsegaye Tadesse

ADDIS ABABA, May 24 (Reuters) - Ethiopia and Uganda on Saturday denied accusations by a U.N. weapons sanctions committee that their soldiers broke the world body's arms embargo on Somalia.

The United Nations says the Horn of Africa nation is awash with weapons despite a 1992 arms ban that followed the collapse of the central government a year before. Somalia has been engulfed in civil conflict ever since.

Dumisani Kumalo, chairman of the U.N. Security Council's Somalia sanctions committee, accused "elements" of the African Union (AU) peacekeeping force in Somalia and Ethiopian and Somali government troops of arms trafficking.

"We want to assure the world community that this accusation does not have an iota of truth," Wahade Belay, spokesman for the Ethiopian Ministry of Foreign Affairs, told Reuters.

"In fact our troops were and still are playing an exemplary role in mitigating the arms trade inside Somalia," he said.

Kumalo said 80 percent of the ammunition on sale in Somalia's numerous arms markets comes from Ethiopian and Somali troops.

Ethiopia sent thousands of soldiers into Somalia in late 2006 to help the Somali government oust an Islamic Courts movement from the south. Since then, the two allies have battled an insurgency led by members of the Islamists.

Kumalo said the presence of Ethiopian troops inside Somalia was itself a violation of the 16-year-old arms ban.

Addis Ababa rejected that.

"JIHADISTS"

The sanctions committee report comes as the world body unanimously adopted a measure for a stronger U.N. presence in Somalia and opened the door for a possible U.N. force.

A 2,200-strong AU peacekeeping contingent, known as AMISOM, has been unable to stem the mounting violence.

Uganda, which has 1,600 troops in Mogadishu, joined Ethiopia in condemning the sanctions committee's accusations.

"I can assert that none of the AMISOM commanders is involved in any form of arms trafficking in contravention of the U.N. arms embargo," said Captain Barigye Bahouku, spokesman for the mission.

Both Ethiopia and Uganda said they would investigate the claims if provided with evidence.

An AU official said he had no information confirming the allegations against its troops but promised an investigation.

"We are going to analyse the report in detail," El Ghassim Wane, head of the AU's conflict management division, told Reuters. "We are requesting AMISOM to carry out an investigation."

Last week, Ethiopian Prime Minister Meles Zenawi said his troops would remain in Somalia until "jihadists" were defeated.

The United States, whose main ally in the region is Addis Ababa, says some of the Islamist-led insurgents have links to terrorist organisations.

Rebels hit Ethiopian and Somali government troops with near-daily attacks. Thousands of Somalis have been killed and some 1 million displaced by fighting. (Additional reporting by Frank Nyakairu in Kampala; Writing by Jack Kimball; Editing by Giles Elgood) (For full Reuters Africa coverage and to have your say on the top issues, visit, http://africa.reuters.com/).

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