By Hereward Holland
OUTSIDE BENTIU, South Sudan (Reuters) - Sudan launched air strikes on South Sudan on Monday, killing three people near an oil town, local officials and residents said, days after South Sudan pulled out of a disputed oilfield.
Weeks of border fighting have brought the former civil war foes closer to a full-blown conflict than at any time since the South seceded in July.
The South accused Khartoum of bombing its forces on Saturday as they were pulling out of Heglig, a disputed oil region it had occupied and which is central to Sudan's economy. South Sudan also said its own territory had come under attack since the withdrawal.
Further stirring tensions, Sudan's President Omar Hassan al-Bashir said he would not negotiate with South Sudan, while Juba called Monday's air strikes a "serious escalation".
Outside the oil town and Unity state capital Bentiu in South Sudan, a Reuters reporter said he saw a fighter aircraft drop two bombs near a river bridge between Bentiu and the neighboring town of Rubkona.
"I can see market stalls burning in Rubkona in the background and the body of a small child burning," he said.
Local officials and residents said three people died in the air strike.
Mac Paul, deputy head of South Sudan's military intelligence, said two Sudanese MiG-29s had dropped four bombs in the area. "This is a serious escalation and violation of the territory of South Sudan. It's a clear provocation," Paul said.
The United Nations Mission in South Sudan deplored what it said were "indiscriminate bombings".
Sudan denied it had carried out the air strike.
"We have no relation to what happened in Unity state, and we absolutely did not bomb anywhere in South Sudan," the country's military spokesman, Al-Sawarmi Khalid, said.
"LANGUAGE OF THE GUN"
South Sudan's armed forces have 10 helicopters but no fixed-wing aircraft, except for one Beech 1900 light transport aircraft, according to an International Institute for Strategic Studies report.
Sudan has denied charges it hit its southern neighbor since the South's withdrawal from Heglig, saying instead it had repulsed a "major" attack on Sunday on a strategic border state town by rebels it says are backed by South Sudan.
Washington condemned this week's incursion, called on Khartoum to immediately stop aerial and artillery bombardment of the South, and urged South Sudan to exercise restraint in its reaction.
Speaking to Sudanese army troops, Bashir vowed not to negotiate with South Sudan after it had occupied the oil-producing Heglig region.
"We will not negotiate with the South's government, because they don't understand anything but the language of the gun and ammunition," he said at a barracks near the oilfield along the contested border.
Bombed-out pipelines were dripping oil in the largely damaged Heglig oilfield, a Reuters journalist said.
Abdelazeem Hassan Abdallah, an oil worker in Heglig, accused South Sudan's forces of attacking the oilfield.
"They know how to do the job completely. They destroyed our main power plant, and they destroyed our processing facilities," he told Reuters.
"CAPABLE OF CAPTURING HEGLIG"
General Kamal Abdul Maarouf, a Sudanese army commander who led the battles in Heglig, said the army had killed 1,200 South Sudanese troops in fighting in the area, an account South Sudan denied.
Journalists travelling on an official trip to the region said they saw bodies strewn on the road to the barracks. It was not immediately possible to verify their nationalities.
"The number of casualties the SPLA has suffered since the 26th or March doesn't exceed 50," said Philip Aguer, a spokesman for South Sudan's army, or SPLA.
After the Unity state attack, in which Aguer said two people had been killed and five wounded, he warned Khartoum:
"We are capable of capturing Heglig for the third time," an apparent reference to a brief occupation of the field by SPLA troops in March which preceded last week's fighting.
The countries are still at loggerheads over the demarcation of their shared border, and other disputes have halted nearly all the oil production that underpins both economies.
South Sudan won its independence in a referendum that was promised in a 2005 peace accord that ended decades of civil war between Khartoum and the south. Religion, ethnicity and oil fuelled that conflict, which killed about 2 million people.
Recent tensions between Sudan and South Sudan have been fuelled by a dispute over how much the landlocked South should pay to export oil via Sudan.
(Additional reporting by Khalid Abdelaziz and Alexander Dziadosz in Khartoum; El-Tayeb Siddig in Heglig; Writing by Ulf Laessing, Alexander Dziadosz and Yara Bayoumy; Editing by Alessandra Rizzo)