Two people were killed on Saturday night in Turkey's southeast Diyarbakir province during clashes between the security forces and Kurdish protesters, security sources said.

Several hundred protesters demonstrating against the construction of new military outposts threw petrol bombs at security forces before opening fire.

Sources said the two protesters were shot dead in fighting that erupted as security forces returned fire. One soldier was also wounded.

In a statement, the Turkish military referred to one of the two people killed as a militant and said the soldiers had responded after they were attacked with live ammunition, petrol bombs and homemade grenades.

Tensions remained high in the area on Sunday with dozens demonstrating after the funeral of one of the protesters killed. Turkish police fired tear gas and water cannon to disperse demonstrators throwing stones.

Increased militant activity and street protests in recent months have fuelled worries over a final deal in the Kurdish peace talks.

Prime Minister Tayyip Erdogan initiated the negotiations in 2012 with jailed Kurdistan Workers' Party (PKK) leader Abdullah Ocalan in a bid to end a 30-year-old insurgency which has killed 40,000 people.

A ceasefire called by Ocalan in March 2013 has largely held, but the PKK halted a rebel withdrawal to bases in northern Iraq last summer, complaining about the slow pace of negotiations.

Protests have flared up in the past few weeks over the construction of new military outposts, with demonstrators blocking a highway between Diyarbakir city and Bingol province.

Erdogan is widely expected to run in Turkey's first direct presidential election in August and support from its Kurdish minority, which accounts for around a fifth of the population, could be key to his chances of success.

With files from The Associated Press