Government spokesman Bereket Simon said a Hungarian and an Italian were wounded while two Germans and two Ethiopians had been kidnapped in the Tuesday attack, that happened in an area prone to banditry and where separatist rebels have operated.

Afar is a barren corner in the Horn of Africa country, and one of the earth's harshest terrains. The highest average annual temperature ever recorded was in Afar's Danakil Depression at 94 degrees Fahrenheit (34.4 Celsius).

Ethiopia quickly blamed its neighbour and arch-foe Eritrea for the attack, saying it had trained and armed the gunmen responsible. Ethiopia also blamed an Afar rebel movement for kidnapping five Westerners in the region in 2007.

Eritrea's envoy to the African Union, Girma Asmerom, was swift to reject the Ethiopian accusation, telling Reuters: "This is pathetic, an absolute lie."

The Afar province's rock-strewn hills give way to vast deserts below sea level, and dry river-beds and acacia thorn-trees dot the landscape. Banditry is widespread in a region once described by the late British explorer Wilfred Thesiger as a "veritable land of death".

Foreigners who venture out into the area usually include researchers, aid workers and some 500 adventure tourists each year visiting geographical wonders like the Danakil Depression, with its ancient salt mines and volcanoes.

"The attack occurred at 5 a.m. on Tuesday, in which Eritrean-trained groups also kidnapped four. Two of them are foreigners, one is a driver and the other a policeman," Bereket said.

SURVIVORS RETURN TO CAPITAL

Ethiopian state television said the victims were part of a 27-member party that also included U.S., Australian and Belgian nationals. It quoted officials as saying 18 members of the group would arrive in Addis Ababa later on Wednesday afternoon.

Hungary said at least one of its nationals had been killed and it would give more precise information later on Wednesday.

Austria said at least one of its citizens had been involved in the attack, adding they were working with Germans and the Ethiopian government to establish the details.

"The group may have consisted of two groups of travellers consisting of nationals from a series of European countries, most likely including Austria," Foreign Ministry spokesman Peter Launsky-Tieffenthal told Reuters.

A German Foreign Ministry spokesman said Berlin was working with its embassy in Addis Ababa to clarify what had happened.

A German media report said the group of tourists had been close to the Erta Ale volcano, one of Ethiopia's most active.

In 2007, gunmen seized five Europeans and eight locals in Afar. The Europeans were handed to the Eritrean authorities less than two weeks later and Britain said Asmara had helped secure their release. The eight locals were freed a few weeks later.

Ethiopia and Eritrea fought a 1998-2000 border war that killed some 70,000 people, and the dispute still festers.

Addis Ababa routinely accuses Asmara of supporting Ethiopian separatist groups, while Eritrea says the accusations are lies designed to tarnish its reputation.

"It has become a trend for Ethiopia to fabricate sensational news against Eritrea whenever the summit is nearing," Girma told Reuters.

The Eritrean envoy was referring to an earlier accusation that Asmara plotted to bomb targets and disrupt an African Union meeting in the Ethiopian capital Addis Ababa in January 2011.

This year's AU summit in Addis Ababa begins next week.

(Additional reporting by Fredrik Dahl in Vienna and Krisztina Than in Budapest; Editing by David Clarke)

• A Permanent Economic Emergency