South Sudanese troops and rebels battled around a key oil hub defying mounting pressure to end four months of civil war despite US threats of "serious implications" if fighting continues, AFP news agency reported.
Monday's government offensive to seize the northern oil town of Bentiu from rebel forces comes just days after a visit from US Secretary of State John Kerry to the capital Juba, where he extracted promises that peace talks would resume to end violence in the world's youngest nation.
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"Let me make clear: if there is a total refusal by one party or the other to engage into a legitimate promise which they agreed on... not only might sanctions be engaged, but there are other serious implications and possible consequences," Kerry said, speaking in the Angolan capital Luanda on the last leg of his African tour.
So far, US-backed diplomatic efforts have struggled to gain traction, with reports that both the government forces of President Salva Kiir and rebel chief Riek Machar are continuing to commit war crimes that have included mass killings, rapes, attacks on hospitals and places of worship, and recruiting child soldiers, AFP reported.
A January ceasefire was never enforced. Stop-start peace talks in Ethiopia have yet to forge agreement on even the basic agenda, despite warnings from the United Nations that the conflict threatens mass famine and genocide.
"There is accountability in the international community for atrocities, there are sanctions, there are possible... peacemaking forces, there are any number of possibilities," Kerry said.
South Sudan's army spokesman Philip Aguer said there had been heavy fighting on Monday focused on Bentiu, capital of the oil-producing Unity state, a day after government troops moved to wrest back control.
"We are fighting in and around Bentiu to take back control," he said.
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"They are resisting, but we have the upper hand." In a later separate statement, Kerry condemned "in the strongest terms" the latest offensives by South Sudanese government forces against opposition-held positions in Nassir and Bentiu.
Such attacks "blatantly violate" the ceasefire deal, he said, adding that the two sides "must resolve their differences at the negotiating table, rather than through military action".
Bentiu fell to the rebels last month. They were accused by the United Nations of massacring hundreds of civilians in the process. The town has swapped hands several times.
Despite the fighting, Juba said it was committed to peace talks and that the president remained determined to meet with his arch-rival, the former vice-president turned rebel leader Machar.
"Of course the president (Kiir) is willing to meet face-to-face with the rebel leader (Machar) so that they sit together to bring peace in the country," foreign ministry spokesman Mayen Makol told AFP, insisting talks would happen "as soon as possible."
Since it broke out in December, the war has claimed thousands of lives, with at least 1.2 million people forced to flee their homes, many living in appalling conditions in overstretched UN bases and in fear of ethnic violence.