Pro-Gadhafi forces deny they are targeting civilians

TRIPOLI, Libya - The United States took steps to throw a financial lifeline to rebels controlling eastern Libya while forces loyal to Muammar Gadhafi focused their firepower on pockets of resistance in the west.

Rebels said government forces fired Russian-made Grad rockets, which rights groups say should not be used in civilian areas, at the rebel-held western towns of Misrata and Zintan.

The rebels struck back in Zintan.

"Rebels attacked posts belonging to Gadhafi forces east of Zintan in the early evening.

The posts have been used to fire rockets into Zintan," the spokesman, called Abdulrahman, said.

"The rebels destroyed at least three tanks and captured two others."

More remote areas of western Libya also came under fire from forces loyal to Gadhafi, trying to break an uprising against his four-decade rule that has put most of the east in rebel hands since it began in mid-February.

"Many in the Western Mountains in towns such as Yefrin, Zintan and Kabau are being killed by this indiscriminate shelling," senior rebel National Council spokesman Abdel Hafiz Ghoga told a news conference in Benghazi in the east.

The United States voiced confidence in the Benghazi-based main opposition council on Wednesday as the US Treasury moved to permit oil deals with the group, which is struggling to provide funding for the battle-scarred areas under its control.

The order by the US Treasury Department's Office of Foreign Assets Control may help to clear up concerns among potential buyers over legal complications related to ownership of Libyan oil and the impact of international sanctions.

The first major oil shipment from rebel-held east Libya, reported to be 80,000 tons of crude, was expected to arrive in Singapore on Thursday for refueling, but oil traders said finding a buyer was not straightforward, with many of the usual traders still worried about legal complications.

A tanker booked for Italian oil company Eni to carry crude to Italy from Gadhafi-held territory in Libya never arrived in port and left empty last week because the sanctions meant the government would not have gotten paid, trade sources said.

"They didn't want the crude to go, because they wouldn't have gotten any money for it," an industry source said on Wednesday, adding, "They could use it to refine into gasoline".

Fighting out of sight

Residents say pro-Gadhafi forces have been surrounding mountain-top towns in western Libya, cutting them off from food, water and fuel supplies and unleashing indiscriminate bombardments on their homes with rockets and mortars.

Libyan officials deny targeting civilians, saying they are fighting armed gangs and al-Qaida sympathizers who are terrorizing the local population.

Rebels who seized a remote post on the western border with Tunisia hurriedly dug trenches after hearing that forces loyal to Gadhafi were on their way to retake the crossing.

The sound of distant explosions could occasionally be heard coming from the Libyan side of the border, signs of a battle that has been going on for weeks in the Western Mountains region, largely out of sight of the outside world.

The rebel spokesman in the Western Mountains town of Zintan, scene of some of the region's most intense fighting, said there was heavy bombardment there on Wednesday, that at least 15 people were wounded and five houses destroyed.

Reuters