ADDIS ABABA, Oct 29 (Reuters) - An Eritrean allegation that Ethiopia planned to invade the Red Sea state in early November was an absurd fabrication, an Ethiopian official said on Monday.

Addis Ababa and Asmara have been locked in a bitter border dispute since an independent boundary commission awarded Eritrea the town of Badme, a flash point of the 1998/2000 border war in which 70,000 people were killed.

Diplomats and analysts say worsening relations between the two Horn of Africa neighbours could erupt into a new war.

"The Ethiopian government denies the allegation of a plot to invade Eritrea in November," Wahade Belay, spokesman for the Ministry of Foreign Affairs, told Reuters.

"The allegation is absurd and a nonsense fabrication. Ethiopia does not anticipate to go to war with Eritrea. Ethiopia is still pursuing its principle to resolve the border impasse with Eritrea through peaceful dialogue," he added.

In an online statement on Saturday, Asmara said intelligence agencies had uncovered the plot to attack its territory in the first week of November.

Ethiopia has accepted the 2002 ruling awarding Badme to its neighbour but has asked for more discussion on implementation.

Last November, the boundary commission gave the two countries one year to physically mark their frontier, or it would mark the boundaries on maps and let them stand.

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