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JUBA/BEIJING (Reuters) - South Sudan freed Sudanese prisoners of war on Wednesday in a gesture it hopes will help defuse tensions between Khartoum and Juba whose armies have been embroiled in escalating cross-border fighting that has threatened to tip into all-out war.
Sitting atop one of Africa's most significant oil reserves, Sudan and South Sudan have been unable to resolve a dispute over oil revenues and border demarcation since the South gained independence in July.
Nearly all oil production has now stopped and the border fighting in contested oil-producing regions has grown more intensive, prompting China, which has economic interests in both countries, and the African Union to push for a diplomatic deal.
"The SPLA (South Sudan's army) handed over prisoners of war to the ICRC. They were 14 who were captured during the battles of Heglig from April 10-15," Philip Aguer, spokesman for South Sudan's army, said in Juba.
Aguer was referring to the Heglig oilfield which the SPLA had captured earlier this month, but later withdrew from, under international pressure. Juba has since accused Sudan's armed forces of bombing its territory, a claim Khartoum denies.
South Sudan's government and its army have said the deal had been brokered by Egypt during its foreign minister's visit to both countries about 10 days ago, and Aguer said the prisoners would be flown back to Khartoum via Cairo.
The prisoners are expected to arrive on Thursday morning, Sudan's state news agency SUNA said in a brief report.
Aguer said the men were mostly Sudanese from the north as well as one South Sudanese who he said had been recruited as a mercenary, adding the Sudanese army was holding at least seven SPLA members as prisoner of war.
"We have requested that they be released if they have not been killed," he said.
Clashes appear to have ebbed following weeks of cross-border fighting after Sudanese Foreign Minister Ali Ahmed Karti said Khartoum was ready to resume talks on security issues, a day after President Omar al-Bashir had ruled out negotiations.
Earlier, residents of Bentiu, about 80 km (50 miles) from the contested border, said the area had come under attack from Sudanese fighter jets, saying they feared their dusty town might be the next target in the conflict.
"I do not want war to come back," Nyachar Teny, an old woman, said in a local market damaged by the Monday air strike in which at least two people had been killed. "It seemed like everyone was finished with war."
A Reuters correspondent in Bentiu said he did not hear any air strikes on Wednesday, after days of bombardment in the area. Sudan has denied carrying out any air strikes.
The United States, China and Britain have all urged both sides to return to the negotiating table and end the fighting along the poorly marked 1,800 km (1,200 miles) long border.
China has significant oil and business interests in both African nations and is one of Sudan's closest allies. Western powers hope Beijing will overcome its reluctance to get involved in the conflict and help resume talks.
South Sudan's President Salva Kiir cut short a visit to China meant to improve ties strained after Juba expelled the head of a China-led oil consortium it accused of helping Khartoum "steal" southern oil.
A government official in Juba and the Chinese foreign ministry gave no reason why the Shanghai leg of Kiir's visit had been cancelled.
China said it would send its Africa enjoy to Khartoum and Juba to help with talks. The enjoy, Zhong Jianhua, is expected to work with the United States on the issue, China said.
"This is the second time he will go to Sudan and South Sudan to promote talks," Foreign Ministry spokesman Liu Weimin said.
The African Union urged both sides to resume talks, which have collapsed several times, to strike a deal within three months or face a binding ruling.
The AU's Peace and Security Council issued a seven-point roadmap late on Tuesday that called on both sides to cease hostilities within 48 hours and called for the "unconditional" withdrawal of troops from disputed areas.
Both nations face severe economic crises with fuel shortages and rising food rising which will make it difficult to fund an all-out war for a long time. The approaching rain season will hamper any sustained ground fighting.
Additional reporting by Aaron Maasho in Addis Ababa and Hereward Holland in Bentiu; Writing by Yara Bayoumy and Ulf Laessing Editing by Maria Golovnina