SISAKET, Thailand/PHNOM PENH July 27 (Reuters) - Thailand and Cambodia have agreed to Malaysia acting as a mediator in their border conflict, the Malaysian Foreign Minister said on Sunday, as the combatants each said the other had launched further artillery attacks across contested areas.

Long-festering tensions over border territory have escalated into armed conflict between Cambodia and Thailand, leading to dozens of deaths on both sides and displacing tens of thousands of people.

Thailand and Cambodia exchanged fire along their disputed border for a second day on Friday, officials from both countries said, with more than a dozen people reported killed and more than 135,000 civilians evacuated.

Thailand warned its conflict with neighboring Cambodia could “potentially develop into a war” as troops used rockets and artillery to shell targets along their contested border for a second

In light of escalating hostilities along the Cambodia-Thailand border, the Indian Embassy in Cambodia on Saturday issued a travel advisory urging Indian nationals to avoid visiting border areas. The advisory comes as clashes between the two Southeast Asian nations enter their third consecutive day,

Thailand favours bilateral negotiation rather than third-party mediation to resolve its military conflict with Cambodia, two Thai officials said, as fighting along their disputed border continued unabated.

Thailand and Cambodia exchanged heavy artillery fire for a second day on Friday as their worst fighting in over a decade intensified and spread to new areas.