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Rebels battling Muammar Gaddafi have appealed for arms and medical aid, as the European Union insisted he step down and US President Barack Obama said the world was “tightening the noose” on the Libyan leader.

Gaddafi is “a leader shooting at his own people”, EU president Herman Van Rompuy said at the close of an emergency summit of the 27-nation bloc in Brussels to examine the crisis and seek consensus on how to deal with it.

“The Libyan leadership must give up power without delay,” Van Rompuy said.

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Opening a door to possible military intervention as Gaddafi’s heavily-armed troops gained the upper hand on the ground, the EU summit expressed “deep concern about attacks against civilians, including from the air”.

“In order to protect the civilian population, member states will examine all necessary options, provided that there is a demonstrable need, a clear legal basis and support from the region,” the statement said.

The legal basis sought by EU states would be a UN Security Council resolution authorising action.

European nations have also repeatedly insisted they would take action in Libya only with approval from the Arab League, which will discuss events in Libya in Cairo on Saturday.

Hungarian Foreign Minister Janos Martonyi, whose country holds the current rotating EU chairmanship, said “the expectation is that they will support a no-fly zone under some conditions”.

Obama, meanwhile, warned that the world was “tightening the noose” on Gaddafi but admitted he was “concerned” about the Libyan strongman’s capacity to cling onto power.

At the same time, he said the United States had decided it was “appropriate to assign” an envoy to deal with the Libyan opposition and help them advance their goals.

On the counter-attack, Libya decided to “suspend” diplomatic relations with France, Deputy Foreign Minister Khaled Kaaim said.

Tripoli has slammed what it called France’s “illegal” decision on Thursday to recognise the rebels’ self-proclaimed national council and warned that the move could lead to a break in ties.

A UN mission is to visit Libya on Saturday to evaluate its humanitarian needs, Kaaim also told a press conference in Tripoli.

In a key victory on the ground for Gaddafi, soldiers fired into the air to celebrate the capture of Zawiyah, a rebel stronghold which put up a fierce two-week resistance.

And operations have resumed after a three-day suspension at a key refinery in Zawiyah which supplies the capital and western Libya, the country’s oil chief Shukri Ghanem said.

On the battlefield, rebels said fighting flared again in the key eastern oil hub and frontline town of Ras Lanuf, after most of them were overwhelmed and driven out in a fierce battle on Thursday after holding it for a week.

In the midst of a heavy-weapons duel, a warplane dropped bombs on a rebel checkpoint 10 kilometres east of the town and on a nearby oil refinery, but no casualties were reported.

A reporter saw flames and a massive plume of thick black smoke rising from the refinery, the second facility to be hit in the week’s fighting.

Later, a second strike hit rebel positions about 15 kilometres east of town.

There was no reliable casualty figure from Friday’s fighting, but a reporter saw at least five bodies, while doctors said 10 people were killed on Thursday.

Medics say 400 people have died and 2000 more been wounded in eastern Libya since February 17.

Earlier, rebels fired a salvo of at least 12 Katyushas from a rocket launcher mounted on the back of a truck, and what rebels said were loyalist army shells and Grad rockets were heard exploding further west.

On Thursday, state television said loyalists had “purged” Ras Lanuf, and Gaddafi’s, son Seif al-Islam, said victory was in sight.

“We’re coming,” Seif said, referring to the loyalist advance towards the eastern rebel bastion of Benghazi, Libya’s second city.

But in Benghazi, up to 10,000 people poured onto the streets on Friday in a carnival-like atmosphere, demanding that Gaddafi quit and praying for victory in a bloody uprising inspired by revolutions in Egypt and Tunisia.

As the fighting continued, volunteer medics calling for international help and the United Nations warning of a potential food shortage.

A few kilometres east of Ras Lanuf, Doctor Awad el-Ghweiry feared his makeshift clinic would not be able to cope.

“Where are all the international organisations?” he demanded, as he and his colleagues treated three rebels and three loyalists.

In Rome, the head of the UN Food and Agricultural Organisation, Daniele Donati, said food security in Libya could be seriously affected by the situation, which “may lead to a sudden disruption of imports and the collapse of the internal distribution system.”

With its fighters in retreat, the opposition appealed for foreign intervention.

“The Libyans are being cleansed by Gaddafi’s air force,” Mustafa Abdel Jalil, head of the rebel national council, told the BBC.

“We asked for a no-fly zone to be imposed from day one.”

“We also want a sea embargo and we urgently need some arms and we also need humanitarian assistance and medicines to be sent to the cities besieged by Gaddafi troops.”

French President Nicolas Sarkozy said Paris had “many reservations” on intervention in Libya “because Arab revolutions belong to Arabs”.

Sarkozy also urged his European partners to follow France’s lead and officially recognise the Libyan opposition, and EU leaders took a step in that direction by terming the opposition a “legitimate interlocutor”.

While Britain and France have been pushing for the Security Council to impose an air exclusion zone over the oil-rich country, the council remains split on the issue and even allies Germany and Italy have sounded words of warning.

Meanwhile, NATO defence ministers have agreed to send more ships towards Libya’s coast but delayed any decision on imposing a no-fly zone, saying clear UN approval was needed first.

In Washington, US Secretary of State Hillary Clinton said proposals for a no-fly zone would be presented to NATO on Tuesday.

But Clinton, who will travel to the Middle East next week and meet senior anti-Gaddafi figures, stressed that any final decision had to be taken by the United Nations.

In related diplomatic developments, UN Secretary General Ban Ki-moon said he will visit Egypt and Tunisia next week, Sarkozy said there would be an EU-African Union-Arab League summit in the coming weeks and G8 foreign ministers are expected to meet in Paris next week.

Elsewhere in the Middle East, police opened fire Friday on anti-government protesters in the southern Yemen city of Aden, a day after embattled President Ali Abdullah Saleh offered sweeping political reform, witnesses said.

At least 14 people were injured, including two who appeared to have been shot with live bullets, hospital staff said.

Bahraini police fired tear gas at anti-regime protesters after blocking them from marching toward armed regime loyalists, as US Defense Secretary Robert Gates began a visit to encourage leaders to embrace reform.

And in Saudi Arabia, a massive security operation appeared to have deterred protesters from a planned “Day of Rage” to press for democratic reform in the conservative kingdom.

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