* Azerbaijan, Nagorno-Karabakh separatists report losses
* International mediators concerned about recurring violence
By Hasmik Mkrtchyan and Nailia Bagirova
BAKU/YEREVAN, Aug 1 At least 10 people were killed in skirmishes between Azeri government forces and ethnic Armenian separatists controlling the breakaway Nagorno-Karabakh enclave of Azerbaijan, officials from both sides said on Friday.
The recurring violence around Nagorno-Karabakh, a mountainous majority Armenian area, underlined the risk of broader conflict in the South Caucasus where vital oil and natural gas flow from the Caspian region to Europe.
Energy-producing Azerbaijan, host to oil majors including BP , Chevron and ExxonMobil, frequently threatens to take Nagorno-Karabakh back by force, and is spending heavily on its armed forces.
Armenia, an ex-Soviet republic and an ally of Moscow, has warned it would intervene if Nagorno-Karabakh were overrun.
Fighting between ethnic Azeris and Armenians first erupted in 1991 and a ceasefire was called in 1994. But Azerbaijan and Armenia have regularly traded accusations of further violence around Nagorno-Karabakh and along the Azeri-Armenian border.
Azerbaijan's Defence Ministry said eight of its soldiers were killed in overnight skirmishes along the line that demarcates Nagorno-Karabakh from Azerbaijan.
"The Armenian army made several attempts to break through Azerbaijan's line of defence ... The blood of our soldiers won't go unavenged," the Azeri ministry said in a statement.
The breakaway enclave also said two of its combatants were killed in the fighting, adding that one more had been killed and two wounded in a clash earlier this week.
Armenia blamed Azerbaijan, also a former Soviet republic, for the latest bloodshed.
"Due to the vigilance and alertness of service members performing their service, the recurrent attempt of subversive groups suffered a setback," an Armenian Defence Ministry source, who asked not to be named, told Reuters.
Nagorno-Karabakh runs its own affairs with heavy military and financial backing from Armenia since the war that killed about 30,000 people two decades ago. Armenian-backed forces also seized seven Azeri districts surrounding Nagorno-Karabakh.
Efforts to reach a permanent settlement of the Nagorno-Karabakh conflict have failed despite mediation led by France, Russia and the United States.
"We are seriously concerned about the recent upsurge in violence along the line of contact. The ceasefire needs to be respected," U.S. mediator James Warlick wrote on Twitter. (Writing by Margarita Antidze; Editing by Thomas Grove and Mark Heinrich)