* Sun letter to the editor new salvo in diplomatic battle
* Britain retained the islands 1982 Falklands War
* Oil exploration raises stakes in sovereignty row
By Hugh Bronstein and Estelle Shirbon
BUENOS AIRES/LONDON, Jan 4 (Reuters) - Britain's biggest-selling newspaper had a simple message for Argentina in an editorial published on Friday in the South American country: "HANDS OFF" the Falkland Islands.
The seven-paragraph epistle, penned by the populist Sun tabloid and published in Argentina's main English language newspaper, came in response to fresh demands from President Cristina Fernandez to open talks over the sovereignty of the South Atlantic archipelago.
The two countries fought a 10-week war in 1982 over the remote islands, which are part of Britain's self-governing overseas territories and are known in Argentina as Las Malvinas.
Britain won the war but Argentina started pressing its sovereignty claim anew last year after oil exploration began in waters near the islands.
"British sovereignty over the Falkland Islands dates back to 1765, before the Republic of Argentina even existed," the Sun said in its open letter to Fernandez, published in both Spanish and English in the Buenos Aires Herald.
"In the name of our millions of readers," the Sun said, "HANDS OFF!"
The Sun, part of media mogul Rupert Murdoch's empire, has a long history of publishing fervently patriotic articles. One of its front pages during the 1982 war it marked the news that British forces had sunk the Argentine warship General Belgrano with the banner headline "GOTCHA."
As the extent of Argentine losses began to emerge, the Sun changed its headline in later editions. A total of 323 Argentines lost their lives in the attack on the Belgrano.
While the rhetoric has yet to reach such levels, tensions have flared between London and Buenos Aires against the new backdrop of oil prospects.
Crude was found to the north of the Falklands in 2010 by Rockhopper Exploration, drawing interest from hedge funds and other investors despite threats from Argentina to disrupt the activity.
In an open letter from Fernandez to Prime Minister David Cameron published in British newspapers on Thursday, the fiery two-term Peronist leader accused Britain of breaching United Nations resolutions calling for a negotiated solution.
Cameron rejects negotiations, saying the approximately 3,000 people of the Falkland Islands have chosen to be British.
In its Friday edition, the Sun used less moderate language for its own British readers than in its open letter to Fernandez, labeling her country a "banana republic."
"Stirring up trouble over the Falklands creates a convenient sideshow for Argentina's tin-pot leaders as they battle problems at home," the Sun said in its editorial, referring to economic woes in Argentina punctuated by slow growth and high inflation.
"But they are wasting their breath. And they should remember what happened last time."