South Sudan's military says at least 200 people trying to flee fighting in the country's north were killed when their boat sank in the White Nile River.
Army spokesman Philip Aguer said Tuesday the boat sank as the passengers, most of them women and children, fled the town of Malakal.
Rebels fighting South Sudan's government for the past month said Tuesday they had captured the town, the capital of Upper Nile state.
Government spokesman Michael Makuei emphatically denied the report.
"This is not correct, this is baseless, this is unfounded. What happened in Malakal is that they, the rebels, attempted to attack Malakal and they have been repulsed, and some are still on the run up until now."
Makuei spoke to reporters in Ethiopia's capital, Addis Ababa, where the government and rebels continue talks on a possible cease-fire.
The government spokesman said the talks are "progressing well" and said the two sides might sign a cessation-of-hostilities deal by Wednesday.
But a member of the rebel delegation said there are other issues that must be worked out, including the role of Ugandan forces in South Sudan. The rebels have accused Uganda of assisting South Sudanese President Salva Kiir.
A proposed cease-fire has been held up by the government's refusal to release 11 political detainees, as demanded by the rebels.
Army forces loyal to President Kiir are battling soldiers who back former vice president Riek Machar, who Mr. Kiir fired in July.
Many civilians have sought refuge from the fighting at U.N. bases in South Sudan. In New York, U.N. spokesman Martin Nesirky said the number of people at the U.N. base in Malakal has doubled in recent days to 20,000.
The United Nations said Tuesday that nearly 500,000 South Sudanese have been displaced from their homes since fighting began. The number includes nearly 75,000 who have fled to Uganda, Sudan, Kenya and Ethiopia.
The fighting in South Sudan has sparked fears of a full-fledged civil war in the country, which became independent from Sudan less than three years ago.