(Adds details, quote from Pristina, paras 13-16)

By Kerstin Gehmlich and Fatos Bytyci

BERLIN/PRISTINA, Nov 24 (Reuters) - The idea of German state involvement in terrorist attacks abroad is ludicrous, the government said on Monday, reacting to reports that three German spies are being held in Kosovo over an attack on an EU office.

Government spokesman Thomas Steg said he would not comment on details of the reports, but told a regular news conference: "The idea that the German government could be involved in terrorist attacks abroad is absurd."

The three Germans were arrested last week and questioned on Saturday by a Pristina district court judge who ordered them to be detained until Dec. 22. A defence lawyer said the three were suspected of having committed an act of terrorism.

A police source in Kosovo has told Reuters the three are members of the BND foreign intelligence agency, Germany's equivalent of the CIA. The BND has declined to comment.

An explosive charge was thrown on Nov. 14 at the International Civilian Office (ICO), the office of European Union Special Representative Pieter Feith, who oversees Kosovo's governance, but caused only minor damage.

German media have said the BND officials had told investigators they had been examining the scene of the explosion, but had not been involved in it.

Sueddeutsche Zeitung daily quoted one of the suspects' lawyers as saying they had gone to the scene "out of curiosity".

"TRUSTFUL RELATIONS"

Kosovo Prime Minister Hashim Thaci said the issue should not be politicised, adding Kosovo laws had to be respected.

"All are equal in front of the law. No one is above the law... We should trust the justice institutions and should not have any prejudgments and political assessments," he said. "Relations with Germany were, are, and will be excellent."

A German foreign ministry spokesman said he hoped for a solution that would satisfy all sides, adding: "We have good and trustful relations with the Kosovo government."

"I assume this case will not have negative effects on our bilateral relations," he said, adding Germany was a key supporter of Kosovo and had been one of the first countries to recognise its independence when it seceded from Serbia in February after nine years under U.N. stewardship.

In Pristina, many were mystified by the case.

The three Germans rented a three-storey house in a Pristina suburb. The house, covered with snow on Monday, had a sign in front reading "Logistics, Coordination and Assessment Service (LCAS), Hohenstein und Hagen GmbH, branch in Kosovo".

Neighbours said they were shocked by the news about the men, who they said arrived in the neighbourhood a year ago.

"I saw them on TV and I recognised them. I couldn't believe that they were arrested," said Hajredin Shala, 70. "I always thought I should ask them to employ one of my sons in their company."

Four days before the bomb attack in Pristina, Kosovan leaders rejected a plan by U.N. Secretary-General Ban Ki-moon for the deployment of an EU police and justice mission, EULEX. (Editing by Mark Trevelyan)

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