Libya rebels flee from key oil port

Hundreds of rebel fighters have retreated from the strategic oil port of Ras Lanouf as Muammar Gaddafi’s army pounds the town with artillery.

The rebels fled eastward in cars and pickup trucks mounted with machine guns.

One said government forces were raining rockets or tank shells on the city in what appeared to be preparation for a full-scale advance.

Shells fell near a city hospital and hit a series of residential buildings as Gaddafi’s tanks moved further along Libya’s main Mediterranean coastal road than they have been since the rebels seized most of the country’s east.

An opposition fighter with a Kalashnikov rifle said he had fled the frontline outside Ras Lanouf.

The retreat was a major setback on a day of rebel victory on the diplomatic front.

France became the first country to formally recognise the rebels’ newly created Interim Governing Council, saying it planned to exchange ambassadors after President Nicolas Sarkozy met two representatives of the group based in the eastern city of Benghazi.

“It breaks the ice,” said Mustafa Gheriani, an opposition spokesman. “We expect Italy to do it, and we expect England to do it.”

Germany said it froze billions in assets of the Libyan Central Bank and other state-run agencies.

The US, UK, Switzerland, Austria and other countries have also frozen Gaddafi’s assets.

“The brutal suppression of the Libyan freedom movement can now no longer be financed from funds that are in German banks,” Economy Minister Rainer Bruederle said.

Both sides in Libya are lobbying for support from Western countries as their leaders debate whether to protect the rebels from Gaddafi’s air force by putting a no-fly zone over some or all of the country.

Britain and France have backed the rebels’ calls for a no-fly zone, but the Obama administration has expressed deep reservations about involvement in another conflict in the greater Middle East.

Nato said it had started round-the-clock surveillance of the air space over Libya, and British Foreign Secretary William Hague said a meeting of EU foreign ministers would discuss how to isolate the regime.

The Libyan government tried to stave off tough action, sending envoys to Egypt, Portugal and Greece.

The international Red Cross said dozens of civilians have been wounded or killed in recent days in battles between the army and opposition.

Fighting between rebels and Gaddafi forces around Ras Lanouf set two oil installations ablaze and inflicted yet more damage on Libya’s crippled energy industry.

In the west, Gaddafi claimed victory in recapturing Zawiya, the city closest to the capital that had fallen into opposition hands.

Western journalists based in Tripoli were taken to a stadium on the outskirts of Zawiya that was filled with Gaddafi loyalists waving green flags and launching fireworks.

Government escorts refused journalists’ requests to visit the city’s main square.; phone lines there have not been working during a deadly, six-day siege.

Red Cross President Jakob Kellenberger said local doctors over the past few days saw a sharp increase in casualties arriving at hospitals in Ajdabiya, in the rebel-held east, and Misrata, in government territory.

Kellenberger said 40 patients were treated for serious injuries in Misrata and 22 dead were taken there.

He said the Red Cross surgical team in Ajdabiya operated on 55 wounded over the past week and “civilians are bearing the brunt of the violence.”

He said the aid organisation is cut off from access in western areas including Tripoli but believes those are “even more severely affected by the fighting” than eastern rebel-held territories.