ROME (AP) _ Italy broke up a KGB spy ring seeking highly sophisticated military information, and a magistrate issued arrest warrants Monday for two Soviets and three others said to work for the ring, news reports said.

Italian secret agents last week raided separate KGB rings in Trieste, an Adriatic port near the Yugoslav border, and La Spezia, on the northwest Ligurian coast, according to Italian newspapers and television.

Investigators in Trieste said Monday that the spying operation foiled there could have seriously damaged Italy's defense capabilities. Authorities in Trieste last week arrested Giorgio Stancich, 42, an Italian electronics technician living in Yugoslavia near the Italian border.

Stancich, who worked for a firm in Trieste that manufactures electronic communications systems, was arrested with documents related to a highly advanced electronic warfare system known as Catrin, the reports said.

The project, still under development but considered one of the most sophisticated systems of its kind and destined for use by NATO, involves computer systems capable of directing an entire battle, including ground and air operations, according to the reports.

In La Spezia, Investigating Magistrate Maria Cristina Failla issued five arrest warrants Monday, news reports said.

Italy's ANSA and AGI news agencies said the warrants were for Natalino Francalanci, 51, a fur dealer from the Pisa area; a former carabinieri police officer; a former Soviet trade representative in Italy; another Soviet, and a Bulgarian.

Of the group, only Francalanci has been apprehended, the reports said. Repeated calls to the prosecutor's office Monday went unanswered.

Francalanci was accused of trying to procure secrets from Oto Melara, a La Spezia firm developing technology for fiber optics and producing carbon fiber plating for a new combat vehicle, news reports said.

Newspapers said Italian agents posed as technicians in the La Spezia firm and provided Francalanci with documents to trace the spy ring.

Newspaper accounts said agents in Vienna, Austria, masterminded the KGB network.

In the first official comment on the case, Trieste magistrates said Stancich's arrest capped ''an extremely arduous and delicate investigation.''

''The brilliant operation foiled the attempt to cause grave damage to the military defense system,'' said the written statement by Giovanni Virdis and Antonio de Niccolo.

They gave no details, saying the investigation was continuing.

Milan's Corriere Della Sera, without citing sources, said KGB agents and half a dozen Italians involved in the case fled Italy when they realized the ring was broken.

It said the KGB agent who hired Stancich was a former Tass news agency correspondent in Rome.

ANSA, quoting unidentified investigative sources, said at least 10 people were involved in the espionage network.

The Soviet Embassy in Rome said Monday it never heard of the people arrested and that all Soviet diplomats and trade representatives in Italy ''worked only for the reciprocally advantageous development of cooperation between our two countries.''