UPDATE 2-Spain may ask U.N. for support over Gibraltar -El Pais
* Spain may step up action over Gibraltar dispute - report
* Artificial reef, border controls at root of fresh crisis
* Spain and Britain both playing tough (Recasts with diplomatic sources)
By Tracy Rucinski
MADRID, Aug 11 (Reuters) - Spain may take its row with Britain over the disputed territory of Gibraltar to the United Nations, stepping up its actions in the conflict, a diplomatic source said on Sunday.
Centuries of friction over Gibraltar, a British overseas territory to which Spain lays claim, flared up this month after Spain complained that an artificial reef being built by Gibraltar would block its fishing vessels.
The source did not specify whether Spain would ask the United Nations to back a request for Britain to give up sovereignty or adhere to certain agreements, but taking the matter to international courts would mark a change of tack and could increase tensions.
Earlier, newspaper El Pais said Spain could take the matter to the International Court of Justice, the U.N. General Assembly or the U.N. Security Council, where Spanish Foreign Minister Jose Manuel Garcia-Margallo will seek support from Argentina, which is serving a term.
"We are studying taking the matter to the U.N. and these are all options that are being considered," the source said, commenting on the report in El Pais.
"The minister is travelling to Argentina in September and plans to exchange ideas over the matter," he added.
Argentina is immersed in its own dispute with Britain over the sovereignty of the Falkland Islands.
Spanish Prime Minister Mariano Rajoy threatened unilateral measures over the Gibraltar spat on Friday, while British navy vessels were heading to the territory for what both Spain and Britain have played down as a routine, scheduled visit.
Rajoy and his British counterpart David Cameron had agreed to try and calm tempers over the disputed territory, though both sides have been reluctant to back down on their positions.
Gibraltar, the tiny rocky promontory near the southern tip of the Iberian Peninsula, has been a source of on-off tensions since Spain ceded the territory to Britain in the Treaty of Utrecht 300 years ago.
The latest dispute arose last month when Gibraltar's boats dumped concrete blocks into the sea to create a reef for fish at the mouth of the Mediterranean.
Spain said the reef would restrict its fishing boats and hit back with tougher border checks and threats of a 50-euro fee for people crossing the Gibraltar border. It is not clear whether such a fee would be legal under EU law.
In an interview on Spanish television on Saturday, Margallo said the entry fee would not be imposed on workers who frequently cross the border for their jobs and pledged aid to the fishermen whose livelihood is being hit by the reef.
Travellers as well as residents of both Spain and Gibraltar continued to endure long queues at the border over the weekend due to Spanish authorities' increased checks on vehicles entering and leaving the territory. (Reporting by Tracy Rucinski; Editing by Mike Collett-White)
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