A blast on a canal vital to Kosovo's water and power supplies has sparked a war of words with Serbia, with fears it could further escalate tensions between the two Balkan nations.The explosion late Friday punched a hole in a canal providing water to hundreds of thousands of people and the cooling systems at two coal-fired power plants that generate most of Kosovo's electricity.

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.

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.