By Carl Odera and Andrew Green
JUBA (Reuters) - Government forces battled rebels to regain control of a flashpoint South Sudanese town on Thursday, the fifth day of a conflict that has deepened ethnic divisions in the two-year-old nation and threatened its vital oil production.
The conflict, which has so far killed up to 500 people, has alarmed South Sudan's neighbours and prompted African nations to send in a team of mediators.
The fighting that erupted around the capital on Sunday night has quickly spread, pitting loyalists of the former Vice President Riek Machar, a Nuer, against President Salva Kiir, from the majority Dinka clan.
Machar has denied Kiir's accusation that he had led a coup attempt.
Thousands of people have sought refuge on U.N. bases, including about 200 oil workers in the main crude-producing region that has till now appeared to escape any clashes.
Soldiers and rebels have fought fierce gunbattles over the town of Bor, north of Juba, the scene of a 1991 massacre by soldiers loyal to Machar of hundreds of Dinka clanspeople.
"The rebels forces attacked Bor town yesterday evening. They managed to capture most of the town. Forces loyal to the government are resisting," Information Minister Michael Makuei Leuth told Reuters. Clashes extended into Thursday, he said.
But the fate of the town was unclear. An army spokesman said on Wednesday night the government had lost control and another official, Jodi Jonglei Boyoris, said on Thursday that government forces withdrew and fighting had stopped.
The United Nations has said that alongside 400 to 500 dead, about 20,000 people have taken shelter on bases of U.N. peacekeepers around the country of 11 million people the size of France. But the United Nations has also said its 7,000 to 8,000 peacekeepers will not intervene in the conflict.
A U.N. spokesman said the 200 or so oil workers who fled to a U.N. base in the Bentiu oil producing area were expected to be evacuated by their company, which he did not name. He did not say if they had fled fighting or were scared of it spreading.
China National Petroleum Corp, India's ONGC Videsh and Malaysia's Petronas are the main firms running the oilfields.
The government said oil output, which had been running at about 245,000 barrels per day, was not affected but there was no independent confirmation. Oil revenues are almost the sole source of government revenues.
The fighting adds new instability to an already volatile region of Africa, derailing the young and undeveloped nation's halting efforts to build a functioning state.
Ministers from Ethiopia, Kenya, Uganda and Rwanda were due to arrive in Juba on Thursday, an Ethiopian foreign ministry official said, the first major initiative to end fighting after months of tension since Kiir sacked his deputy in July.
The U.N. envoy to South Sudan, Hilde Johnson, in the early stages of the conflict, had said she was in contact with the political leaders to restore calm.
A Ugandan spokesman said the United Nations had requested President Yoweri Museveni's help. Uganda has long had close ties to southerners who fought Sudan's government for decades before securing an independent state in 2011.
"Uganda has a huge stake in the stability of South Sudan," Ugandan spokesman Ofwono Opondo said. "It is in our interest that we do anything possible to restore peace there."
Tensions have been mounting in South Sudan since Kiir sacked Machar in July. The two men had exchanged accusations since then, with Machar saying Kiir was acting like a dictator.
A persistent dispute with Sudan over their border, oil and security have added to the sense of crisis. The row led to shutting oil production for about 15 months until earlier this year, slashing back state revenues and undermining efforts to improve public service in a nation with barely any tarmac roads.
(Additional reporting by Drazen Jorgic in Nairobi; Writing by Edmund Blair, Editing by Angus MacSwan)