PARIS (Reuters) - An investigation into rumors of neo-Nazi activity at a seminary in Bavaria has resulted in two student priests being expelled for imitating the Nazi salute and making jokes about death camps, two bishops announced.

The commission probing rumours of neo-Nazi activity at the seminary in Wuerzburg also found a third student had said participants in recent anti-racism marches in the southern German state deserved "a smack in the face", the bishops said.

Rumors of a "brown (Nazi) network" at the seminary began circulating in early May, including talk of a party in its basement pub to mark the Nazi leader's April 20 birthday. Using the symbols of Nazism or glorifying it is illegal in Germany.

The independent commission found no proof it had taken place but even the hint of neo-Nazi sympathies was deeply embarrassing for a Church still struggling with the fallout from revelations of sexual abuse of minors by priests in recent years.

"All forms of xenophobia, racism and extremism are incompatible with Christianity," Bamberg Archbishop Ludwig Schick told a news conference in Wuerzburg on Wednesday.

"We have to make more intensive efforts at the seminary to increase the awareness of the special relations between Jews and Christians," Bamberg Bishop Friedhelm Hofmann said.

The seminary serves Bamberg and Wuerzburg dioceses and both posted the two bishops' comments and remarks by the head of the commission on their websites.

Norbert Baumann, a local judge who headed the inquiry into the neo-Nazi rumours, said the probe quizzed 28 people including all 18 seminarians in Wuerzburg. He did not name the two expelled seminarians but recounted what they had done.

NOT YIDDISH WIT

One seminarian, he said, had told at least three jokes that were "not 'Jewish jokes' in the sense of Yiddish or Jewish wit but ... completely unacceptable and unbearable 'concentration camp jokes' that mock the mass murder of countless Jewish children, women and men during the Third Reich".

Down in the seminary pub, he and another seminarian imitated Hitler and gave the Nazi salute, Baumann said.

One of them attended a concert by a controversial far-right rock band on Hitler's birthday, excusing himself from Mass at the seminary without saying why, the judge said. Schick added this seminarian was also fascinated by Nazi uniforms

The other remarked one day after lunch that the seminary cafeteria needed "a Negro to clean up" the tables.

Baumann said the inquiry found the men did not play neo-Nazi music at the seminary but often played the Badenweiler March "in the full knowledge that it is considered to be Hitler's favourite marching song".

The third seminarian mentioned in the report was not expelled for mocking the anti-racism march, Baumann said.

Schick, who is in charge of the German Church's worldwide contacts and brings youth groups to visit the death camp at Auschwitz every year, said he had marched in and addressed an anti-racism protest in Bamberg similar to the one in Wuerzburg.

"What more must we do, where do we have to be more vigilant and resolute against racism, anti-Semitism, nationalism and xenophobia?" he asked.

(Reporting By Tom Heneghan; Editing by Michael Roddy)