WASHINGTON (Reuters) - U.S. Secretary of State Antony Blinken spoke with Azerbaijani President Ilham Aliyev on Wednesday about the importance of advancing the peace process with neighbouring Armenia, a State Department spokesperson said.

       Yerevan suffered a major defeat last September when Baku's forces retook the region of Nagorno-Karabakh, which while part of Azerbaijan had a predominantly Armenian population.

       The two South Caucasus republics are trying to agree a formal peace treaty but talks have become bogged down in issues including demarcation of their 1,000-km (620-mile) border, which remains closed and heavily militarized.

       Mutual suspicions remain high and on Sunday, the Azeri defence ministry said Armenia was concentrating troops along sections of the frontier. Armenia dismissed the report.

       Blinken told Aliyev there was no justification for increased tension on the border and cautioned that aggressive actions and rhetoric from any side would undermine peace prospects, State Department spokesperson Matthew Miller said in a statement.

       In an official readout of the conversation, Azerbaijan said Aliyev "had expressed dissatisfaction with the lack of transparency and inclusiveness" around a trilateral meeting Armenia is due to hold with the United States and the European Union on Friday.

       Aliyev aired concerns that increased EU and U.S. backing for Armenia, along with Baku's concerns about potential military support for Yerevan, could fuel an arms race in the region and potentially lead to provocations.

       StarPicks

       Bringing customisable comfort to new heights

       "Blinken reassured President Aliyev that the April 5 meeting was not intended to be against Azerbaijan" and would focus on Armenia's economy, the statement added.

       (Reporting by Kanishka Singh, Ismail Shakil and Felix Light, writing by David Ljunggren, editing by Sandra Maler)