Two Americans deny spy charges in Iranian court

TEHRAN - (Reuters) - Two Americans held in Iran for the last 18 months on suspicion of espionage pleaded not guilty in court on Sunday on the first day of their closed-door trial, state television reported.

Shane Bauer and Josh Fattal were arrested on July 31, 2009 near Iran's border with Iraq, along with a third American, Sarah Shourd, who was released on $500,000 bail in September and returned home.

The trio, in their late 20s and early 30s, say they were hiking in the mountains of northern Iraq and, if they crossed the unmarked border into Iran, it was by mistake. Under Iranian law, espionage can carry the death penalty.

State-run English language Press TV said the two men had appeared in court but that Shourd, who had been summoned, did not. All three pleaded not guilty of espionage and illegal entry, Press TV said.

No date has been set for the trial to resume, it added. The proceedings were closed to the public and press.

The affair has compounded tension between Tehran and Washington, which have had no diplomatic relations since the 1979 Islamic Revolution and the subsequent storming of the U.S. embassy by revolutionary students.

A trial date set for last November was postponed at the last minute due to the absence of Shourd, who has met President Barack Obama and his Iranian counterpart Mahmoud Ahmadinejad in the United States since her release.

Press TV quoted the Tehran prosecutor's office as saying "it has 'compelling evidence' that three were cooperating with U.S. intelligence agencies".

The defence lawyer, who was barred from seeing his clients for four months before the day of their trial, said he was confident the spying charge would be shown to be baseless and even charges of illegal entry into Iran could be beaten.

"I have studied all the details and I am sure that my clients are not guilty and the espionage charge does not have any substance," Masoud Shafii told Reuters before the trial.

"Even if the illegal entry happened, due to the fact that the border is not signposted and they could not have recognised it; even if it did happen, they are not at fault," he said.