OTTAWA, March 8 (Reuter) Canada said on Wednesday that fishing vessels from the European Union had moved back into a disputed area off Canada's east coast, setting the stage again for a clash in international waters.

Canada gave an ultimatum this week to the European fishing vessels to leave the disputed area or risk being boarded and seized and on Tuesday Fisheries Minister Brian Tobin said the Spanish vessels he blamed for overfishing had left the area.

But on Wednesday a European Commission spokesman in Brussels said its ships where still in the disputed area on the Grand Banks and would continue fishing.

Canadian officials said it had appeared some Spanish vessels had left, but they later had moved back into the disputed area and 15 Spanish boats were still there.

"There are 15 Spanish vessels left on the edge of the Grand Banks. We believe they are still fishing," Fisheries and Oceans official Ann Sicotte said on Wednesday.

She said 23 Spanish ships appear to have left for Spain.

Canada has dispatched a fifth ship to the area to watch the European fishing boats.

The Spanish and Portuguese governments gave instructions to continue fishing on the Grand Banks as this is perfectly legal, the spokesman for the European Commission added.

Canada is trying to stop a surge in catches by EU vessels which it says are threatening stocks of one of the last commercial species in the region.

The dispute flared up after the EU rejected its share of a 27,000 tonne 1995 quota for Greenland halibut fixed by the Northwest Atlantic Fisheries Organisation (NAFO) and instead set itself a much higher limit. Greenland halibut is also known as turbot.

Canada says it is trying to protect the dwindling fish stocks in the area and has passed a law allowing it to seize ships in international waters if they are overfishing, but several nations say they do not recognise Canada's jurisdiction in international waters.