* North Sudan moved tanks into area on May 21
* Khartoum defies U.S., U.N. and says won't withdraw
* Analysts say northern land grab may spark return to war
(Adds Khartoum demonstration)
By Jeremy Clarke
JUBA, Sudan, May 26 (Reuters) - South Sudan's President Salva Kiir called on north Sudan on Thursday to withdraw its forces from the disputed Abyei region but said there would be no war over the incursion and it would not derail independence.
North Sudanese armed forces seized control of the oil-producing Abyei region on Saturday, forcing tens of thousands to flee and sparking an international outcry seven weeks before south Sudan secedes to form a new nation.
"We will not go back to war, it will not happen," Kiir told reporters in Juba, the capital of south Sudan which is due to become independent on July 9.
Abyei was a key battleground in Sudan's last north/south civil war and both sides see it as a symbolic emblem. The region is used all year round by the Dinka Ngok people, who have strong ethnic links to the south, and for part of the year by northern Misseriya nomads.
Southerners voted for secession in a January referendum, a vote that was promised in a 2005 peace deal that ended the last conflict.
Analysts fear a north Sudanese land grab could spark a return to full-blown conflict, a development that would have a devastating impact on the region by sending refugees back across borders and creating a failed state in the south at birth.
Khartoum has defied U.S. and U.N. calls, saying it will not withdraw from land it says belongs to the north. A monitoring group that uses satellite images said it had spotted more north Sudanese armour in positions that could be deployed to the area.
Southern Information Minister Barnaba Benjamin said the north was moving "thousands" of Misseriya tribesmen, who are supported by Khartoum, into Ngok villages.
In north Sudan, 200 mostly student demonstrators held a rally at the defence ministry in the capital Khartoum to support the northern army. "One army, one people," they chanted.
Kiir called on Sudan's overall President Omar Hassan al-Bashir to pull out northern forces from the area that contains fertile grazing land.
"We fought enough ... We made peace," Kiir said. "The south will become independent on July 9. Whether the north recognises the south or not, that is not the problem."
A Washington-based monitoring organisation, Satellite Sentinal Project, said imagery and analysis indicated the north Sudanese armed forces had gathered heavy armour and artillery around El Obeid, about 430 km (270 miles) north of Abyei.
John Prendergast of Enough Project, which supports Sentinel, said in a statement the imagery showed the Sudanese government "is prepared to intensify military operations in Abyei and along the contested border, where most of Sudan's oil lies". He said Khartoum "seeks to intimidate the government of Southern Sudan and the international community into deeper compromises at the negotiating table over critical issues of border demarcation, the disposition of oil revenues, and the future status of Abyei".
Abyei remains the most contentious point in the countdown to the secession of the south, the source of 75 percent of the country's 500,000 barrels a day oil production.
The 2005 deal promised Abyei residents their own referendum over whether to join north or south, but that did not take place as neither side could agree who was qualified to vote.
The peace deal created a coalition government dominated by Bashir's National Congress Party and the former southern rebel Sudan People's Liberation Movement (SPLM), headed by Kiir. Both were also allowed to keep their own armies.
The coalition government is to be dissolved on the secession of the south which now has its a semi-autonomous government.