Kosovo's Interior minister Xhelal Svecla said on Saturday that police had arrested eight people after an explosion hit a canal that sends water to its two main power plants, an incident Pristina labelled a "terrorist act" by neighbouring Serbia.

Kosovo and Serbia continued to sling allegations at each other on Sunday, just days after an explosion targeting a strategic canal in Kosovo sent tensions soaring between the long-time rivals.

By Valentina Dimitrievska in Skopje Eight people have been arrested in connection with what Kosovo police have classified as a terrorist attack on a water channel in northern Kosovo at the end of last week.