KAMPALA, Uganda — With battles still raging in disputed territory along its border, the new nation of South Sudan announced plans Saturday to move its capital from the main city of Juba to a small town in the north.

Just north of the border, in Sudan, fighting continued in two states between the Sudanese army and rebels aligned with the south. In South Kordofan State, 17 people were killed, the official SUNA news agency reported Saturday, giving no further details.

To the east, thousands of people were reported to be fleeing from Blue Nile State, where Sudanese troops began a ground offensive on Friday night. The U.N. refugee agency said Saturday that about 16,000 people had fled across the border into Ethiopia since the fighting there began, The Associated Press reported Saturday.

South Sudan, which seceded from Sudan in July, has denied accusations by Sudan that it was aiding the rebels. Officials said Saturday they were moving ahead with plans for building their new nation.

The new capital will be in Ramciel, in Lakes State, which is believed to be the place where the late South Sudanese leader John Garang envisioned the capital.

"It is a beautiful land," said Barnaba Marial Benjamin, South Sudan's information minister. "This is a long-term plan for a capital while we continue with our priorities."

The government considered keeping the capital in Juba, South Sudan's largest and fastest-growing city but had trouble finding the 12-square-mile site needed for new government buildings because of ethnic tensions there.

"There are indigenous communities in these areas," Benjamin said. "Unless they agree we cannot just take their land."

The principal ethnic group in Ramciel is Dinka, who have been among the staunchest backers of independence.

South Sudan is riddled with ethnic and tribal tensions. Last month, more than 600 people were killed in a battle over a cattle raid by ethnic Murle on ethnic Nuer. Since its inception, the country has also ranked near the bottom of many measurable development indicators. There are few paved roads, electricity is spotty at best, and infant and maternal mortality rates are some of the highest in the world.