New fighting in Sudan's Blue Nile border state

KHARTOUM (Reuters) - Sudan's army has clashed with rebels in Blue Nile state, which borders South Sudan and where fighting has been going on for five months, but the army denied on Thursday that rebels had shot down a helicopter.

Clashes spread to Blue Nile in September after violence broke out in June in the oil-producing state of South Kordofan between the army and rebels from the northern wing of the Sudan People's Liberation Movement, which wants to topple the Khartoum government.

Khartoum wants to explore oil in Blue Nile which is also rich in minerals.

The fighting has already forced about 417,000 people to flee their homes, more than 80,000 of them to newly independent South Sudan, according to the United Nations.

SPLM-North rebels said in a statement that clashes broke out in the area of But on Wednesday in southern Blue Nile during which 26 soldiers were killed.

It said rebels had shot down an army helicopter and destroyed five military vehicles.

Army spokesman Sawarmi Khalid Saad said seven rebels had been killed and six soldiers wounded during fighting in the area. "The army was clearing the areas of rebels," he said, denying that a helicopter had been shot down.

Blue Nile and South Kordofan contain large groups who sided with the south in a decades-long civil war, and who say they continue to face persecution inside Sudan since South Sudan seceded in July.

The SPLM is now the ruling party in the independent south and denies supporting SPLM-North rebels across the border.

Events in South Kordofan and Blue Nile are difficult to verify because aid groups and foreign journalists are banned from areas where fighting takes place.

SPLM-North is one of a number of rebel movements in underdeveloped border areas who say they are fighting to overthrow Sudan's President Omar Hassan al-Bashir and end what they see as the dominance of the Khartoum political elite.

Sudan and South Sudan, who still have to resolve a range of issues including the sharing of oil revenues, regularly trade accusations of supporting insurgencies on each other's territory.