BERLIN. Sept 8: Russia's Kursk nuclear-powered submarine was sent to the bottom of the Barents Sea last month with 118 sailors aboard after being holed by an anti-ship missile fired by a Russian cruiser taking part in exercises. Germany's Berliner Zeitung reported today, reports AFT

Quoting a report from the FSB. Russia's Intelligence service (the ex-KGB). the newspaper said the Kursk was sunk by a radar-gu(ded Granlt missile fired by the Kirov class nuclear-powered cruiser Peter the Great during exercises Russia's Northern Fleet was conducting August 12. .

The newspaper said the report, and Its stunning conclusion. was presented to Russian President Vladimir Putin on August 31.

Up to now, the exact cause of the tragedy has remained a mystery. Moscow initially said It came about because ol a collision between the Kursk and another submarine, possibly from a NATO country, but then backed off a little to suggest only that an underwater collision was responsible.

In a statement ahead of its edition, the Belincr Zeitung said the “detailed report” showed the cruiser had fired the missile, which was fitted with a new hunting system.

The missile had ploughed through the water for some 20 km then an underwater explosion was registered aboard the cruiser, followed by another moments later, the report

said.

The two explosions would have been seen from the bridge of the cruiser," the newspaper said.

' Alx»artl the cruiser, they Initially thought the second explosion was part of the exercises. The FSB Investigating committee wrote in Its report that they It only dawned on them later that the position of the Kursk and the Granlt missile coincided perfectly.” at a depth of 400 metres (1.300 feet), the newspaper continued.

It said that the report did not say why exactly the missile hit the Kursk.

But the conclusions are a new blow to the image of Russia's military. It said, adding that Putin was going to keep quiet about the conclusion until his return from the UN Millennium Summit being held in New York. It said lie planned to discuss the findings with military chiefs in a meet Ing excluding the FSB.

The FSB. for its part, has dented any knowledge of the report, the newspaper said.

The Peter the Great had apparently been firing Granlt missiles almost dally since August 2. and on August 12. during the Barents Sea exercise, its mission was to test the Granlt over short distances In "the most realistic conditions possible." the newspaper said.

The head of the North Fleet. Admiral Vyacheslav Popov, and vice-Admiral Mikhail Mozak were apparently aboard the cruiser when the Kursk went down.

US officials speaking under anonymity have already spoken of two explosions recorded by US submarines In the area when the Kursk went down — raising the theory that an external explosion caused the Kursk's torpedos to blow up In tl>e bow of the submarine.

According to a US report, the second explosion, which occurred one minute and 16 seconds after the first, was 45 to 50 times more powerful.

Russian television RTR also said Thursday that the navy would start recovering the bodies of the 118 dead sailors on the Kursk at the beginning of October.

The work will liave to be done before die temperatures on the Barents Sea drop too low, said Igor Spasky of the submarine construe tlon agency.

Meanwhile, die head of a US investment bank said his firm, KBZ Investment Inc, would donate 250,000 dollars to relatives of the victims of die disaster, to boost Russian government compensation of26.000 dollars so far given to each family.

The money -- around 2.100 dollars per family — will be transferred to the account of the governor of Murmansk, near the submarine's home base, for dlstribudon. said bank president William Zylka.

He said the Russians had been one of among the greatest friends of the United States since the 1943 batde of Stalingrad, when Russian forces captured a Nazi German army at great cost to themselves.