The soldier was shot while on foot patrol on an isolated border road south of Newtownhamilton, South Armagh. The IRA later admitted responsibility for the killing, the third terrorist murder of a soldier this year.
First reports suggested the terrorists used a powerful long-range rifle, the Barrett Light 50 which had been used in previous murders. Police said this could not be confirmed until after a post mortem.
Earlier a grenade exploded while being carried by one of the participants in a Protestant march near the 'peace line' between loyalists and republicans in west Belfast.
A man lost his hand and part of an arm and a woman was wounded in the back. The RUC said they believed the grenade was to have been used by loyalist para- militaries in an attack on police but went off prematurely. The crowd had been throwing missiles at officers.
The explosion was in Ainsworth Road, between the loyalist Shankill and republican Springfield Road, as the tail of the 1,000-strong Orange march passed through. Police had re-routed the demonstration to prevent it going into Roman Catholic areas.
The injured were ferried to a number of hospitals by ambulances, taxis and private cars. In past years Protestants paraded on the Springfield Road, but more recently the security forces have prevented them from doing so. The area is now almost exclusively Catholic.
Police and the Army fear breaches of the peace between marchers and locals who regard such processions as an intrusion.
At the start of the march, Orange Order officials handed a letter to a senior officer of the Royal Ulster Constabulary complaining of the re-routing. A police cordon prevented marchers reaching Springfield Road.
There were verbal confrontations as marchers and bandsmen stood in front of police lines. They were eventually moved on by parade marshals. Bottles were thrown at police, several of whom were hurt. One person was arrested. A loaded semi-automatic pistol was later recovered at the scene of the blast.