Clashes broke out between soldiers and militants from the outlawed Kurdistan Workers' Party (PKK) after the rebels attacked a barracks near Palu in eastern Turkey, the agency said.

Security forces launched a search operation to find the assailants, the agency added.

Meanwhile, Turkish troops overnight entered northern Iraq for the second time in five days, penetrating 10 kilometres (six miles), a security official said Sunday, after warplanes conducted bombing raids Saturday on PKK rear bases in the neighbouring country.

Three people were killed in the excursion into the Qandil mountains, the official added, without specifying whether the dead were civilians or PKK fighters.

Saturday was the bloodiest day in two years for the Turkish army after Kurdish rebels killed 11 soldiers in the far southeast of the country near the border with Iraq, the army said.

According to the military, 12 rebels died in a counter-attack.

The PKK has vowed to launch attacks in all Turkish cities if the government maintains its policy of military confrontation, a rebel spokesman told AFP Saturday.

Turkish Prime Minister Recep Tayyip Erdogan in turn pledged to keep up the fight against the separatists and said Turkey was willing to "pay the price" to "annihilate" the PKK.

On Sunday, Erdogan and other dignitaries arrived in the eastern city of Van where the military is based to attend a ceremony to honour the fallen soldiers.

The mounting violence in recent months has undermined the government's bid to reach a peaceful end to the 26-year-old conflict with Kurdish rebels seeking a separate homeland in the country's southeast.

The conflict with the PKK, considered a terrorist organisation by Turkey and much of the international community, has claimed more than 45,000 lives since it began in 1984, according to the army.