The fierce clashes to control the South Sudanese town of Bor on Tuesday represent a pivotal development in the two-week-old conflict, giving rebels more clout in peace talks being held this week while potentially undermining President Salva Kiir’s grip on the government and his ruling party.

After losing Bor little more than a week ago, loyalists of former vice president Riek Machar, who is leading the rebellion, stormed back in Tuesday morning, attacking government forces and seizing strategic parts of the town. By Tuesday night, it was unclear how much territory the rebels had captured, with some reports suggesting they were in full control.

Even as the fighting raged, American and African mediators were pushing both sides to attend peace talks in the Ethiopian capital, Addis Ababa, and by Tuesday afternoon both rebel and government officials announced they would send representatives, raising the prospects of a truce. Donald Booth, the U.S. special envoy to South Sudan, said in a statement that it is “an important first step, toward achieving a cessation of hostilities,” in the world’s newest country.

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Still, the situation in Bor remained tense, if unclear, late Tuesday, hours after the peace talks were announced, with both rebel and government forces refusing to back down. “There is fighting and confusion in Bor,” said South Sudanese military spokesman Philip Aguer on Tuesday night. “We are not in contact with our commander.”

Aguer disputed claims by the rebels that they controlled the town. “Some of our soldiers are in parts of Bor,” he said.

The decision to attack Bor on the last day of the year, when a cease-fire deal proposed by African mediators had reached its deadline, was a calculated move by Machar, who has a doctorate in strategic planning, said analysts. If his forces take over Bor, which is a mere 120 miles from the capital, Juba, it will place him in a stronger negotiating position at the peace talks.

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Taking over Bor could also deliver a strong blow to Kiir’s ability to govern the country, analysts say. The town, the capital of the central state of Jonglei, is the stronghold of the Dinkas, Kiir’s ethnic group and the largest one in South Sudan. Many of the leading figures of the Sudan People’s Liberation Movement, now the ruling party, who helped win independence from Sudan in 2011 belong to the Dinka-Bor clan.

That includes John Garang, the charismatic guerrilla leader of the SPLM who was killed in a 2005 helicopter crash, a few months after signing the peace agreement with Sudan that ended a 22-year civil war. After Garang’s death, Kiir, though he was not a Dinka-Bor, became the SPLM’s leader and eventually the president.

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In recent months, a struggle for power within the SPLM has unfolded. Many of Kiir’s most vocal opponents are Dinkas. They include some of the 11 senior party stalwarts that he had arrested two weeks ago after accusing Machar of staging an attempted coup, which triggered the fighting that has quickly spread to many parts of the country.

Kiir’s opponents have accused him of being an autocrat, ineffective and corrupt. South Sudan’s Information Minister Michael Makuei, who is part of Kiir’s inner circle, has denied the allegations.

Underscoring the tensions, Machar announced Tuesday that his delegation to Ethiopia would be led by Rebecca Nyandeng Garang, the widow of John Garang.

“The significance of Bor is not so much its strategic value but its symbolic value,” said J. Peter Pham, director of the Atlantic Council’s Africa Center. “This is John Garang’s territory. This is the Dinka heartland. . . . Losing the heartland of the most prominent group among the Dinkas could undermine him [Kiir] even further.”

The power struggle has triggered an ethnic conflict pitting ethnic Dinkas against ethnic Nuer, of which Machar is a member. It has also raised concerns that regional powers could enter the conflict. On Monday, Ugandan President Yoweri Museveni, a Kiir ally, warned Machar that if he doesn’t sign a peace deal, regional armies could join in to suppress his rebellion. A day later, he agreed to the Ethiopia talks.

Hundreds of civilians, if not several thousand, have been killed, and at least 180,000 people have fled their homes, including about 75,000 who are taking refuge in U.N. bases nationwide, according to the United Nations.

The conflict also left scores of Americans and other foreigners trapped in several towns, including Bor. On Dec. 21, when the rebels first laid siege to the town before being pushed out by government forces, four U.S. servicemen were injured when three U.S. military aircraft came under fire while trying to evacuate American citizens.

An American missionary family in the town of Malakal, the subject of a Monday profile in The Washington Post, had not been evacuated as of Tuesday morning, said Anna Talbott, a family member in the United States, in an e-mail. The family was caring for 10 South Sudanese orphans and had sought refuge inside the U.N. peacekeeping base in Malakal.

By Tuesday morning, the rebels had seized an airstrip on the outskirts of Bor, and had taken control of the intersection of a key road leading to Juba, said U.N. spokesman Joseph Contreras. The rebels — who include defected soldiers from the national army and a brutal militia loyal to Machar known as the “White Army” — also controlled the area around a U.N. peacekeeping base near the airstrip.

The White Army is a gang of Nuer youths loyal to Machar and numbering in the thousands. They are called the White Army because of the white ash, made from dried cow dung, that they apply on their bodies, apparently to protect them from insects.

U.N. employees began hearing gunfire near their compound at around daybreak, Contreras said. Personnel saw some rebel forces moving down the road in the direction of Juba, while others headed further into Bor.

“By 7:30 a.m., our colleagues were hearing sustained tank fire, rockets and small arms fire,” Contreras said.

He said all U.N. staff in Bor are safe and have been accounted for, and added that there was no reason to believe that they faced any “imminent threat of violence.”

Meanwhile, yet another pocket of humanitarian woes is emerging. Tens of thousands of South Sudanese civilians fled Bor in recent days in anticipation of an attack, South Sudanese officials and aid workers said Monday. Many crossed the White Nile River on boats into neighboring Lakes state.

Now, an estimated 70,000 civilians have sought refuge in the town of Awerial, arriving with only a few belongings. They have no access to clean water, food or shelter, according to Doctors Without Borders. Others were hiding in swamps. Thousands more are arriving each day, said the agency, adding in a statement that "living conditions are verging on the catastrophic.”