* Kiir, Machar due to meet on Friday in Addis Ababa
* First face-to-face meeting since fighting began
* U.S. imposed sanctions on two commanders
* More measures threatened if fighting continues (Adds details of planned talks on Friday, Norway comment)
By Aaron Maasho
ADDIS ABABA, May 8 (Reuters) - South Sudan's rebel leader Riek Machar arrived in the Ethiopian capital on Thursday to meet President Salva Kiir, a rebel source said, after international pressure for face-to-face talks to end four months of conflict and avert a possible genocide.
Friday's talks in Addis Ababa will be the first time the two rivals have sat together since fighting erupted in mid-December. Thousands of people have been killed, about a million have fled their homes and rights groups say there may have been war crimes committed.
The United States, other world powers and African neighbours, which welcomed South Sudan's independence from Sudan in 2011, have piled pressure on the two men to halt the violence that continued despite a January ceasefire deal.
Washington imposed sanctions on two commanders from opposing sides this week. Diplomats say more steps will follow if there is no action to stop what has become ethnically-driven killing.
Machar's spokesman James Gatdet Dak said Machar was heading to Addis Ababa and that he would meet Kiir after holding talks with the host, Ethiopian Prime Minister Hailemariam Desalegn. A rebel source later told Reuters he had arrived.
It is the first time the rebel side has publicly declared Machar's agreement to attend the talks.
Ethiopia is leading mediation efforts as chair of the regional African grouping the Intergovernmental Authority on Development (IGAD).
"The agenda will be presented by the mediators," Dak said. "We think they will discuss a transitional government, power sharing, but we will wait and see."
There had been doubt as to whether Machar would turn up. U.N. Secretary-General Ban Ki-moon said this week that the rebel leader had told him he would "do his best" to get there.
Kiir told international visitors, including U.S. Secretary of State John Kerry, that he would attend.
Kiir's foreign minister, Barnaba Marial Benjamin, said discussions would be about a "transitional process" not a transitional government, and insisted Kiir would stay on until 2015 elections. Machar has demanded Kiir resign.
Diplomats involved in the mediation say the focus on Friday would be ending violence and implementing a "month of tranquillity", which the two sides agreed to this week.
They also hope the meeting will start laying the groundwork for a sustainable political solution.
The United States said its sanctions on two commanders was a "clear warning".
Norway, another of South Sudan's main Western sponsors and donors, also said patience was running out and the two leaders had to respond or face tougher action.
"This is the message that Riek Machar and President Salva Kiir will hear loudly when they come to Addis on Friday," Norwegian Foreign Minister Borge Bende told Reuters.
Fighting has increasingly followed ethnic lines, with troops loyal to Kiir, an ethnic Dinka, battling supporters of Machar, a Nuer. Machar was sacked as deputy president in July, sharpening their years of rivalry.
Clashes have quickly spread to oil producing areas in the north of the country, reducing the flows of crude by about a third from 245,000 barrels per day before the conflict and threatening the young nation's almost sole source of revenues. (Additional reporting by Andrew Green in Juba; Writing by Edmund Blair; Editing by James Macharia and Robin Pomeroy)