Serbia's president has rejected any responsibility for a powerful explosion that temporarily cut water and power supplies to large swathes of neighboring Kosovo.

Kosovo's Interior minister Xhelal Svecla said on Saturday that police had arrested eight people after an explosion hit a canal that sends water to its two main power plants, an incident Pristina labelled a "terrorist act" by neighbouring Serbia.

Serbian President Aleksandar Vucic on Sunday denied his country had staged an attack on a strategic canal in neighbouring Kosovo that has reignited tensions between the two.