Peru has denied reported claims by Evo Morales, the Bolivian president, that it had allowed the US to establish a secret military base on its territory.

The claims have sparked a diplomatic row between the two nations, with Lima saying it would recall its ambassador to Bolivia and Alan Garcia, the Peruvian president, saying Morales should "shut up".

"I would say ... why don't you shut up?" Garcia said when asked about Morales, mimicking a line used by Juan Carlos, the Spanish king, to admonish Hugo Chavez, Venezuela's president, a close ally of the Bolivian leader.

"Deal with your own country, and not mine," he added.

Over the weekend, Morales reportedly said that Peru had agreed to allow a secret US military base in its territory - a claim denied by Peru.

The US state department also said there were no plans to establish a military base in Peru.

Free trade row

Morales, attending a meeting of the Mercosur trade bloc in Argentina, said Garcia was intolerant.

Alan Garcia has also pushed for a trade deal with the EU [AFP]

Morales has also allegedly encouraged Peruvians to join a national strike on July 9.

He also said Garcia was looking "fat and not very anti-imperialist" lately.

Tensions between Peru and Bolivia have been high since Peru signed a free-trade agreement with the US late last year.

Bolivia has denounced the pact and, along with with Ecuador, has slowed the efforts of Colombia and Peru to negotiate a free-trade deal between the European Union and the Andean community.

This week, the EU cancelled talks with the four-nation Andean bloc that were set for July, citing discord among its members, Ecuador's foreign ministry said.

Like Venezuela and Bolivia, Ecuador leans to the left, and Rafael Correa, the Ecuadorian president, has opposed renewing a lease that allows US troops to use an air base on its territory for anti-drug operations.

The lease on the base in Ecuador, Peru's northern neighbour, runs out in 2009.