By Carl Odera and Ben Makori
JUBA, Dec 22 (Reuters) - South Sudan said it had sent more soldiers to retake the flashpoint town of Bor from rebels and kept control of oilfields as fighting spread to a neighboring state in a conflict that has raised fears of a collapse into ethnic civil war.
Foreign Minister Barnaba Marial Benjamin said the army in Bor had spotted former Vice President Riek Machar - the man the government accuses of starting the fighting in Africa's newest country - on the battlefield, but he had escaped by boat.
It was impossible to verify the minister's account independently and Machar could not be reached for comment. There have been varying reports of his whereabouts since the fighting started.
Clashes between rival groups of soldiers in the capital Juba a week ago have spread across the landlocked and impoverished country, which won its independence from Sudan in 2011 with support from successive U.S. administrations.
The army acknowledged losing Bor in the northern Jonglei state on Wednesday, and a day later the United Nations said oil workers had taken refuge in its bases in neighbouring Unity.
International and regional powers have urged both sides to stop fighting, fearing for the stability of an already fragile surrounding region that includes some of Africa's most promising economies, including Kenya and Ethiopia.
President Salva Kiir, from South Sudan's Dinka ethnic group, accused Machar, a Nuer who he dismissed in July, of trying to launch a coup. The two men have long been political rivals.
Machar dismissed the charge but has since told the BBC and other outlets that he is commanding troops fighting the government.
Government soldiers had come across Machar with a group of fighters in Bor, foreign minister Benjamin said, without going into details of where or when the encounter took place.
"Riek managed to escape, used his boat along the Nile and ended up in his village of Ado and went into Bentiu (the administrative capital of Unity) ... the night before he attacked government institutions," Benjamin added.
Reuters television footage showed the government sent more troops on Saturday to Bor - the scene of an ethnic massacre carried out in 1991 by Nuer fighters loyal to Machar.
"The government had to assert its sovereignty and send in troops in order to push out these renegades in the main city centre ... they are being cleared from this city now," he added.
Benjamin said Machar was not in control of oilfields in Unity state.
"Of course there is a threat. But ... he is not occupying the oilfields. The oil has been running. It is just because the workers there are frightened because of what is happening. I am sure this is an area that must be properly protected," he said.
Information Minister Michael Makuei said on Saturday an army divisional commander in Unity State, John Koang, had defected and joined Machar, who had named him the governor of the state.
Speaking in Khartoum, South Sudan Ambassador Mayen Dut Wol said oil was flowing normally. South Sudan's estimated output of 245,000 barrels per day supplies almost all of its government revenues and the hard currency it needs to buy food and other vital imports.
The United Nations said around 62,000 people, had been forced to flee in five out of South Sudan's 10 states. Around 42,000 of them were seeking refuge at U.N. bases, it added.
"Looting of humanitarian compounds has been reported in Jonglei (Akobo and Bor) and Unity. Several U.N. and NGO compounds in Bor town have reportedly been completely looted, including vehicles stolen," the U.N. Office for the Coordination of Humanitarian Affairs (OCHA) said in a report.
The U.N. peacekeeping mission in the country said on Sunday it had started relocating its non-essential staff.
Three U.S. aircraft came under fire from unidentified forces on Saturday while trying to evacuate Americans from the conflict. The U.S. military said four of its members were wounded in the attacks.
The U.N. mission in South Sudan also said one of four U.N. helicopters sent to Youai, in Jonglei state, had come under small-arms fire on Friday. No crew or passengers were harmed. (Reporting by Ben Makori and Carlvin Odera in Juba; Addtional reporting by George Obulutsa in Nairobi and Tom Perry in Cairo; Editing by Andrew Heavens)