* Rockets, small arms fired across border

* Two Thai dead, six Thais wounded

By Ek Madra

PHNOM PENH, April 3 (Reuters) - Thai and Cambodian soldiers exchanged rocket and rifle fire on a disputed stretch of their border on Friday, killing two Thais in the latest flare-up of an ancient feud over a 900-year-old Hindu temple.

Both sides accused each other of firing first in two separate clashes near the Preah Vihear temple, which is claimed by both Southeast Asian nations and saw an armed stand-off last year.

Two Thai soldiers were killed and six wounded in the fighting, the deputy commander of Thailand's Second Army, Lieutenant-General Thawatchai Samutsakorn, told Thai television.

Cambodian Information Minister Khieu Kanharith said 4 Thais had died and another 10 Thai soldiers were being held by Cambodian troops.

Thailand's Foreign Ministry denied that any Thais had been captured during the morning or afternoon clashes.

"We believe that this incident arose from a misunderstanding in the area," Foreign Ministry spokesman Tharit Charungvat told reporters in Bangkok.

There were reports of two Cambodians killed, but Khieu Kanharith said they had not been confirmed.

The latest fighting comes a day after a Thai soldier lost a leg when he stepped on a landmine in an area claimed by Thailand.

A Thai patrol visited the blast site early on Friday morning and encountered 20 Cambodian soldiers.

"After talks between the two sides failed, the Cambodian side started to walk away and turned back to open fire at Thai troops with rifles and RPG rockets, forcing the Thai side to fire back in self-defence," Thailand's Foreign Ministry said in a statement.

A second round of fighting erupted in the afternoon, with the two sides exchanging rife and rocket fire, and setting a market near the temple ablaze. There were no reports of civilian casualties.

Preah Vihear, or Khao Phra Viharn as it is known in Thailand, sits on an escarpment that forms the natural border between the two countries and has been a source of tension for generations.

The International Court of Justice awarded it to Cambodia in 1962, but the ruling did not determine the ownership of 1.8 square miles (4.6 sq km) of scrub next to the ruins, leaving considerable scope for disagreement. ------------------------------------------------------------ FACTBOX-Preah Vihar and Thai-Cambodian tensions [nBKK390612] ------------------------------------------------------------

Tensions rose last month when 100 Thai troops crossed into a disputed area near the temple and were stopped by Cambodian soldiers, but no fighting occurred.

The border had been quiet for months while the Southeast Asian neighbours sought to jointly demarcate the jungle-clad area where one Thai and three Cambodian soldiers died in last October's exchange of rifle and rocket fire.

Cambodian Prime Minister Hun Sen, a former Khmer Rouge commander, warned this week that his soldiers would fight if Thai troops crossed the disputed border again.

The site is 600 km (370 miles) east of Bangkok and only a decade ago was controlled by remnants of Pol Pot's Khmer Rouge guerrilla army.

Few foreign visitors go there, although both countries have said they would like to develop the area as a tourist destination.

The Cambodia-Thailand Joint Border Committee will meet again on Sunday for three days of talks in the Cambodian resort town of Siem Reap to try to find a solution to the row. (Additional reporting by Kittipong Soonprasert in Bangkok; Writing by Darren Schuettler; Editing by Alan Raybould)

AlertNet news is provided by