"The federal government condemns in the strongest way all forms of terrorism," German Foreign Minister Frank-Walter Steinmeier said in a statement.

He expressed his condolences but urged Ankara "to react in a measured way in order to avoid a dangerous destabilisation of the region."

"There is a fear that this latest provocation (by rebels) could unleash a spiral of violence in the region," he said.

The Turkish government has said 12 soldiers and 32 rebels were killed in heavy clashes near the country's tense border with Iraq on Sunday.

Turkey has been threatening to invade northern Iraq to take military action against Kurdistan Workers' Party (PKK) bases there.

Ankara says some 3,500 PKK fighters are based in northern Iraq where they are able to obtain weapons and are supported by Iraqi Kurdish leaders, a charge the Iraqi Kurdish administration strongly denies.

The United States strongly opposes any unilateral Turkish action in northern Iraq as a move that could destabilise the relatively calm region.