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Juba - South Sudan's president said his soldiers had seized the regional capital Malakal back from rebels on Monday, a report dismissed by insurgents battling in the world's newest country.
If confirmed, it would be the second major centre retaken in the past three days by government forces, who have been backed by troops from neighbouring Uganda.
The United Nations says thousands of people have been killed in a month of clashes pitting troops loyal to President Salva Kiir against rebels supporting Riek Machar, who was sacked as vice president in July.
Initially triggered by a political row, battle lines have increasingly followed ethnic lines with Kiir's Dinka battling Machar's Nuer.
“They took Malakal and other areas around in the Upper Nile region,” Kiir told a news conference, referring to his forces.
He did not say if the soldiers who retook Malakal, capital of oil-producing Upper Nile region, had received any help from Ugandan troops.
Kampala's involvement has angered the rebels and raised the spectre of the conflict in one of the Africa's poorest states overflowing its borders.
BP says South Sudan holds the third-largest oil reserves in sub-Saharan Africa after Angola and Nigeria.
A rebel spokesman in Addis Ababa, where talks aimed at securing a ceasefire have been grinding on, dismissed Kiir's statement.
“It is true that they made an attempt to capture the town around 1pm this afternoon, but they were defeated. Malakal is still in our hands,” Lul Ruai Koang told Reuters.
Witnesses say Malakal, a major transit hub on the White Nile, has been nearly destroyed by weeks of heavy shelling between both sides.
Control of the town has changed hands at least three times since the fighting started in mid-December and there have been conflicting statements about who controls it in the past.
Kampala had said its soldiers were instrumental in the recapture of Bor, administrative centre of neighbouring Jonglei state, over the weekend.
Both Kiir and rebels have declined to sign a ceasefire agreement in Ethiopia due to disagreements over the fate of 11 detainees held by authorities in Juba and the involvement of foreign troops.
Rebels insist the detainees be freed before a deal can be signed while the government maintains that they will only be released when the due process of law has been followed.
South Sudan seceded from Sudan in 2011 under a peace agreement to end decades of war with the Khartoum government. That conflict also saw fighting between southern factions, including one splinter group led by Machar.