KHARTOUM/JUBA, Apr 19, 2012 - Sudan's President Omar Hassan al-Bashir all but declared war against his newly independent neighbor on Thursday, vowing to teach South Sudan a "final lesson by force" after it occupied a disputed oil field.

South Sudan accused Bashir of planning "genocide" and said it would fight to protect its people.

Mounting violence since Sudan split into two countries last year has raised the prospect of two sovereign African states waging war against each other openly for the first time since Ethiopia fought newly-independent Eritrea in 1998-2000.

Both are poor countries - South Sudan is one of the poorest in the world - and the dispute between them has already halted nearly all the oil production that underpins both economies.

Appearing in medal-spangled military uniform at a large rally, Bashir danced side-to-side, waved his walking stick in the air and made blistering threats against the leadership of the South, which seceded last year after decades of civil war.

"These people don't understand, and we will give them the final lesson by force," the burly military ruler told the rally in El-Obeid, capital of the North Kordofan state. "We will not give them an inch of our country, and whoever extends his hand on Sudan, we will cut it off."

China, a major investor in the oil industry in both countries, expressed "serious concern" about the increase of tensions and called on both sides to stop fighting, "maintain calm and exercise maximum restraint".

U.N. Secretary-General Ban Ki-moon said South Sudan's seizure of the oil field was an "illegal act" and called on both countries to stop fighting.

South Sudan separated from the rest of Sudan with Bashir's blessing last July under the terms of a 2005 peace deal. But since then violence has steadily escalated, fuelled by territorial disputes, ethnic animosity and quarrels over oil.

Last week, South Sudan seized Heglig, a disputed oilfield near the border between the two countries, claiming it as its rightful territory and saying it would only withdraw if the United Nations deployed a neutral force there.

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