Two Reuters journalists arrested in Myanmar while investigating a massacre of Rohingya Muslims have been found guilty of breaching the country’s Official Secrets Act and sentenced to seven years in prison.

Wa Lone, 32, and Kyaw Soe Oo, 28, are being held in prison in Yangon after being arrested in December, in a landmark case that has prompted international outrage and been seen as a test of progress towards democracy in the south-east Asian country.

In his ruling, judge Ye Lwin said the men “tried many times to get their hands on secret documents and pass them to others. They did not behave like normal journalists.”

As he was led to a police van in handcuffs, Wa Lone said: “I have no fear. I have not done anything wrong … I believe in justice, democracy and freedom.” Kyaw Soe Oo hugged his wife while she was sobbing and held her until police took him away.

Reuters condemned the verdict as “a major step backwards” for Myanmar.

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“Today is a sad day for Myanmar, Reuters journalists Wa Lone and Kyaw Soe Oo, and the press everywhere,” the Reuters’ editor-in-chief, Stephen J Adler, said in a statement. Adler called for Myanmar to review the decision urgently.

The defence lawyer Khin Maung Zaw said the verdict was “bad for our country” and that he would “take any option to get their immediate release”.

Press freedom advocates, the United Nations, the European Union and countries including the US, Canada and Australia had called for the men to be acquitted.

The journalists were looking into the deaths of 10 Rohingyaat the hands of soldiers and Buddhist villagers in Inn Din, a village in the north of Rakhine state. After being invited to a dinner by officers, they were detained.

Prosecutors accused the men of obtaining secret state documents, in breach of the Official Secrets Act. The journalists said they were framed by police who gave them the documents during the dinner, and that they were targeted for their reporting. Kyaw Soe Oo said that while being investigated he was deprived of sleep, forced to kneel for hours and had a black hood placed over his head.

One prosecution witness said under cross-examination that he had written the location of the arrest on his hand so he would not forget it while he was testifying. Another admitted that he burned his notes of the arrest.

Concerned by what was widely seen as a draconian attack by Myanmar authorities on the free press, dozens of journalists and activists marched in Yangon on Sunday in support of the men.

The verdict was condemned by human rights activists, the UN, the US and Britain.

Knut Ostby, the UN resident and humanitarian coordinator in Myanmar, said he was disappointed by the court’s decision. “Wa Lone and Kyaw Soe Oo should be allowed to return to their families and continue their work as journalists,” he said.

The US ambassador to Myanmar, Scot Marciel, said the decision was “deeply troubling”. Dan Chugg, Britain’s ambassador to Myanmar, said he was extremely disappointed by the verdict.

Brad Adams, the Asia director for Human Rights Watch, described the convictions as outrageous, adding: “These sentences mark a new low for press freedom and further backsliding on rights under Aung San Suu Kyi’s government.”

The verdict comes during a time of intense international scrutiny on Myanmar authorities following a damning UN report about the military’s treatment of the Rohingya, which it said amounted to ethnic cleansing. More than 700,000 Rohingya have fled Myanmar to bordering Bangladesh over the past year after a campaign of violence by the military.

Last week, the UN said Myanmar army generals should be investigated and prosecuted for “gross human rights violations and serious violations of international humanitarian law”. In the report, which was rejected by the Myanmar government, de-facto leader Aung San Suu Kyi was criticised for failing to support the Rohingya.