13 June 2011 Last updated at 06:28 ET

Israel denies arrest of 'Mossad spy' in Egypt

The man is suspected of inciting youths to rise up against the army after the fall of President Mubarak

Israel has denied Egyptian claims that a suspected Mossad spy was arrested in Cairo, calling them false and baseless.

Egypt's state prosecutor detained the man on Sunday on suspicion of "spying on Egypt with the aim of harming its economic and political interests", the official Mena news agency reported.

Mena said the man posed as a foreign correspondent covering anti-government protests in Cairo's Tahrir Square.

He tried to sow sectarian strife and turn people against the army, it said.

President Hosni Mubarak stepped down on 11 February, after a three-week uprising against his nearly 30-year rule.

The suspect's aim was to "spread chaos" and cause a "security breakdown" in the days following Mr Mubarak's departure, a statement issued by Egypt's public prosecutor said.

New Egypt

Israeli officials have denied the allegations.

"There is no such thing, no Israeli agent has been arrested in Egypt," foreign ministry spokesman Yigal Palmor told the BBC on Monday.

"These reports are false. So far we did not receive any information from the Egyptian authorities on an Israeli citizen who has been arrested," he added.

Following the departure of Mr Mubarak - who co-operated with Israel on security matters - tensions have flared between the two neighbours.

Cairo's new military rulers have eased restrictions at a Gaza border crossing that Mr Mubarak had kept tightly controlled.

There has also been pressure on Egypt's military council to cancel or alter a contract under which Egypt sells natural gas to Israel.

Critics say the price is too low, and that Mr Mubarak's associates took bribes to seal the deal.

Egypt resumed pumping gas on Friday after a pipeline blast halted the flow of gas to Israel.

Last month, Egyptian authorities arrested an Iranian diplomat on suspicion of spying during the popular uprising.

The diplomat - who had diplomatic immunity - was released with days and flown out of Cairo.