Brussels, Mar 16 (IANS/AKI): The European Union (EU) said it hoped Italy and India would find a "mutually acceptable" solution to the escalating dispute over Rome's decision not to return to India two marines for trial on murder charges.

"The EU is taking note of the ongoing discussions between India and Italy and continues to hope that a mutually acceptable solution can be found through negotiation," said a spokesperson for Catherine Ashton, the EU's foreign policy chief.

Angered by the Italian government's refusal to return the two marines -- Massimilano Latorre and Salvatore Girone -- to stand trial for the killing of two fishermen off India's southwest coast in February 2012, New Delhi is downgrading its diplomatic ties, Indian government sources said Friday.

India has instructed its ambassador-designate Basant Kumar Gupta not to go to Rome, meaning there will be no ambassador-level representation between the two countries. India's Supreme Court has also slapped a temporary travel ban on Italian ambassador to New Delhi, Daniele Mancini.

In its letter to the Italian ambassador, the Supreme Court said Mancini "violated" a "sworn declaration" he presented in February that Italy would return the marines.

Latorre and Girone were allowed back home to Italy to vote in the national elections.

The marines face trial by a special Indian court for shooting and killing two Indian fisherman, Jelestine Valentine and Ajesh Binki, while guarding an Italian oil tanker off the coast of Kerala.

The Italian government claims India does not have jurisdiction in the case as the incident took place in international waters.