PARIS (AFP) - A Chad army helicopter fired rockets Friday in an area close to Sudan's Darfur border racked by tension over rebel activity and refugee flows, a French military source told AFP.

"Three Chad army helicopters took off at 0530 (GMT) and 0545 from Abeche, one of which fired rockets before returning to its base," the French source said.

The source said French soldiers numbering 1,250 and based in Chad under a longstanding defence agreement between Ndjamena and Paris had no knowledge of Chadian rebel movements in the area.

Similar numbers of French troops are also in the region under the leadership of a European Union peacekeeping mission, whose high command in Brussels said Friday there had been an incident involving rebels.

EU military officials said that the head of the EUFOR mission in the region, Irish Lieutenant General Patrick Nash, had relayed concern at a meeting with top brass.

"He said that something happened this morning involving rebels in eastern Chad. He didn't specify if they came from Sudan or not. They are still investigating what happened," one officer said, on condition of anonymity.

"There are no details at the moment," he said.

A second officer confirmed Nash's comments.

A rebel spokesman, Abderaman Koulamallah, denied any attack by Chadian government forces.

"A Chadian helicopter overflew our positions along the border at high altitude, but sheered off as soon as we disclosed our anti-aircraft guns," he told AFP by telephone.

He claimed EUFOR was trying to boost morale among government troops, adding, "We are preparing for a battle and they are panicking."

The head of the African Union, Jean Ping, held talks with the presidents of Chad and Sudan on Thursday in a bid to resolve a growing stand-off.

Ping met Chad's President Idriss Deby in Ndjamena, moving on to Khartoum in the evening to hold discussions with Sudanese President Omar al-Beshir.

On Saturday, rebels from war-torn Darfur staged an unprecedented attack on Khartoum's twin city of Omdurman in which dozens of people were killed.

Sudan accused Chad of backing the rebels and broke off diplomatic ties on Sunday. Chad closed its border the following day, ramping up tensions.

Relations have been strained since 2003 when war broke out in Darfur, sending hundreds of thousands of desperate refugees fleeing across the Chadian border.

EUFOR began in March its year-long United Nations mandate to protect hundreds of thousands of refugees from Darfur as well as people displaced by insurgency in Chad and the northern Central African Republic.

A rebel offensive on Ndjamena in mid-February held up deployment of EUFOR, which will eventually number 3,700 troops.

Ndjamena was able to repel that invasion thanks to its helicopter fleet and the assistance of French troops, who secured airports allowing assault aircraft to maneouvre.

A European military source said Chad had moved heavy reinforcements into eastern border regions following "infiltrations," in anticipation of a new rebel assault ahead of the rainy season.

Koulamallah said that current rebel movements did not necessarily mean a new attack on Ndjamena but "the final objective is to oust Idriss Deby."

Meanwhile the UN refugee agency said it had scaled down activities and staff movements in Chad because of escalating violence in the east of the country.

"We are very concerned by the escalating violence which has accelerated in the past three months," Jennifer Pagonis, spokeswoman of the UN High Commissioner for Refugees said.

"We fear that the attack on Khartoum last weekend would further destabilise the security situation in the east," she added.

The agency said that "as a precautionary measure, we have restricted movements of staff and are carrying out only essential tasks such as follow-up on protection cases, food and water distribution and health assistance".

The UNHCR said refugee camp guards had been killed and vehicles hijacked in recent incidents.

Some 250,000 refugees have flooded into Chad from Darfur for the past five years, with another 190,000 Chadians driven from their homes by cross-border raids.

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