KHARTOUM — The United Nations said on Sunday it is deeply concerned about the latest outbreak of fighting in Sudan's volatile border region, where it reported 16,000 people have fled one town alone.

Georg Charpentier, the UN's chief humanitarian coordinator for Sudan, was "deeply concerned about the recent outbreak of fighting in Blue Nile state" between the Sudanese army and ex-rebel troops loyal to Sudan's main opposition party, the SPLM-North, the UN humanitarian office (OCHA) said in a statement.

Some 16,000 people -- the entire estimated population -- were reported to have fled the flashpoint border town of Kurmuk into neighbouring Ethiopia since the fighting began, OCHA added.

Clashes erupted in Damazin, the capital of Blue Nile, early on Friday, and quickly spread to other parts of the state, after troop build-ups on both sides.

They also follow warnings that the three-month-old conflict in nearby South Kordofan, another ethnically divided border state, was likely to spill along Sudan's new international frontier with the south.

The SPLM-North said the army bombed Kurmuk on Friday, killing two women and a child and destroying the main water tank, depriving civilians of drinking water.

The former garrison town was a key battleground in the devastating decades-long conflict between Khartoum and the ex-southern rebels which ended with a peace deal in 2005.

On Sunday, Charpentier urged both sides "to end the fighting immediately and to seek to resolve any disputes through peaceful means, to prevent more loss of life and to enable displaced people to return to their homes."

Khartoum appears increasingly determined to assert its authority within its new borders following South Sudan's formal declaration of independence on July 9, moving to disarm troops outside its control.