South Sudan peace talks open

South Sudan's army are battling rebels for control of a key oil town as the warring parties prepare for direct talks to end the raging conflict that has taken the world's youngest nation to the brink of civil war.

Fighting intensified as the army moved on the rebel-held town of Bor, even as government and rebel negotiating teams gathered at a luxury hotel in neighbouring Ethiopia's capital Addis Ababa.

'We have enough forces who will defeat the rebels within 24 hours,' army spokesman Philip Aguer said in South Sudan, with reports of heavy battles involving tanks and artillery on the outskirts of Bor, a dusty oil town that has already exchanged hands three times since fighting began.

'These forces -- the rebels -- are now retreating back,' Aguer said, quashing rebel claims that they had been marching on the capital Juba.

Rebel leader and former vice president Riek Machar told Britain's Telegraph newspaper that his forces would hold back from attacking Juba in the hope of achieving a 'negotiated settlement'.

Government forces should also stop trying to take territory under his control, Machar added.

The US embassy in South Sudan ordered a further pullout of staff because of the 'deteriorating security situation' and said it had successfully evacuated 20 embassy personnel on Friday.

The ongoing battles prompted the top UN aid official in South Sudan, Toby Lanzer, to warn that soldiers and rebels must protect civilians and aid workers, or risk worsening a situation he described as 'critical'.

However, UN teams accessed World Food Programme stores in war-ravaged Bor on Friday, with aid to be distributed to civilians, Lanzer said, suggesting the centre of town at least was still calm.

Meanwhile in the calm of the hotel in Addis Ababa, rivals met special envoys from regional nations and Ethiopia's foreign minister confirmed that direct talks are expected to start on Saturday.

'We just finished the first round of proxy talks with both negotiating teams of South Sudan,' the minister, Tedros Adhanom, said on his Twitter feed.

'Will proceed to direct talks tomorrow (Saturday),' he said.

Western nations also weighed in, with Britain's Foreign Secretary William Hague, who earlier this week urged both sides to commit to an immediate ceasefire, saying he had called Ugandan President Yoweri Museveni to discuss the South Sudan talks and Uganda's 'constructive role'.

Thousands of people are feared to have been killed in the fighting, pitting army units loyal to President Salva Kiir against a loose alliance of ethnic militia forces and mutinous army commanders nominally headed by Machar.

Fighting erupted on December 15 when Kiir accused Machar of attempting a coup in the oil-rich but impoverished nation.

Machar denied this, in turn accusing the president of conducting a violent purge of opponents. He has refused to hold direct talks with Kiir.

The violence has forced around 200,000 people to flee their homes.