NALUT, Libya (Reuters) ? Rebels in Libya's Western Mountains launched an offensive against Muammar Gaddafi's troops on Thursday and the opposition won diplomatic recognition from Portugal, which joined some 30 states to have made such a move.
The rebels claimed to have taken several towns. Their stronghold Benghazi was awash with speculation over the fate of military leader Abdel Fattah Younes, who defected from Gaddafi's side at the start of the uprising but was recalled from the front on Thursday.
With prospects fading of a swift negotiated settlement, both sides seem prepared for the five-month war to grind on into the Muslim holy month of Ramadan in August.
A rebel official said no deal was worth talking about unless it meant Gaddafi and his powerful sons left Libya, while the veteran leader vowed to fight on "until victory, until martyrdom."
Hours after rebels attacked Ghezaia, a town near the Tunisian border held by the government since the conflict began and from which it controls an area of the plains below the mountains, they said they had defeated Gaddafi's forces.
"Gaddafi's forces left the areas when the attack started," said rebel fighter Ali Shalback. "They fled toward the Tunisian border and other areas."
Reuters could not go to Ghezaia to confirm the report, as rebels said the area around the town could be mined. But looking through binoculars from a rebel-held ridge near Nalut, reporters could see no sign of Gaddafi's forces in Ghezaia.
Another rebel commander said the towns of Takut and Um al Far had also been taken.
At a checkpoint outside Nalut, the nearest rebel town, young rebel fighters sounded optimistic as the fighting began, chanting "God is great" as they sped to and from the front.
The first dead and wounded from the fresh offensive were brought in, with hospital sources saying they received two dead rebels and 18 wounded, as well as nine wounded Gaddafi soldiers, during the morning.
Juma Ibrahim, a rebel commander in western mountains, told Reuters by phone from town of Zintan that Takut and Um al Far had also been taken in the day's offensive.
Tunisian TV said the border had been closed.
Rebels have taken swathes of Libya since rising up to end Gaddafi's 41-year rule.
They hold northeast Libya including their stronghold Benghazi, the western city of Misrata and much of the Western Mountains, their closest territory to the capital.
Yet they remain poorly armed and often disorganized.
"We can beat Gaddafi now, we have captured more weapons from the Libyan army, mostly rockets and AK-47s," said Mohammed Ahmed, 20, a market trader turned fighter.
CAPTURED
Sustained bombardments could be heard from Nalut, where a captured government soldier, whose hand had been blown off, was led to a hospital bed next to wounded rebel adversaries.
"We don't want to keep fighting. Everybody is against us," the soldier, who gave his name as Hassan, told Reuters.
Both sides spent the day attacking each other with missiles and mortar bombs, in the kind of fighting that usually just extends the stalemate.
Gaddafi has weathered a rebel advance and four months of NATO air raids on his forces and military infrastructure.
A recent flurry of diplomatic activity has yielded little, with the rebels insisting Gaddafi step down as a first step and his government saying his role is non-negotiable.
Western suggestions that Gaddafi might be able to stay in Libya after ceding power appeared to fall on deaf ears.
U.N. envoy Abdel Elah al-Khatib visited both sides this week with plans for a ceasefire and a power-sharing government that excludes Gaddafi, but won no visible result.
The rebels said any deal that did not envisage Gaddafi and his sons leaving the country was "not worth talking about" while the Libyan appeared defiant on Wednesday, urging rebels to lay down their arms or suffer an ugly death.
"We all lead this battle, until victory, until martyrdom," Gaddafi said in a broadcast message.
At a briefing to the U.N. Security Council in New York, Lynn Pascoe, who heads the body's political department, said both sides had been posturing since discussions began, and added:
"Both sides are willing to talk, but they are still emphasizing maximum demands at this point, and patience is clearly required before detailed discussions can begin."
MONEY, INFIGHTING?
The rebels received a further boost on Thursday when Portugal followed Britain in recognizing them.
London has also unblocked 91 million pounds ($149 million) in frozen assets, joining the United State and about 30 other nations who have now recognized the opposition, potentially freeing up billions of dollars in frozen funds.
Austria said it wanted to unfreeze up to 1.2 billion euros ($1.7 billion) of Libyan money and transfer it to the rebels, but needed legal papers to show that a financial body set up by the NTC amounted to a valid central bank "identical to the one in Tripoli" to whom the money had belonged.
Rebel sources in the stronghold of Benghazi said Abdel Fattah Younes, who has been leading the rebels' military campaign, had been recalled from the front, fuelling speculation over the fate of a key figure in the rebel movement.
It was not immediately clear why Younes, Gaddafi's former security minister who defected to the rebel side in February, was being questioned. But rumors circulated that he was suspected of having had secret talks with Gaddafi's government.
The cash-strapped rebels, who control Libya's oil-rich east, have been selling fuel to raise urgently-needed funds, but are unable to pump new supplies because of war disruption.
A tanker carrying crude oil has sailed from Benghazi for Italy, as the rebels sell the last of their stockpile, industry sources and ship tracking data said on Thursday.
An NTC official said senior rebel leader Mahmoud Jibril was on a visit to Qatar but declined to say what he was doing there.
(Additional reporting by Rania El Gamal in Benghazi, Hamid Oul Ahmed in Algiers, Missy Ryan and Lutfi Abu Aun in Tripoli, Andrei Khalip in Lisbon, Olesya Dmitracova and Ikuko Kurahone in London, Sylvia Westall in Vienna, Humeyra Pamuk in Dubai and Patrick Worsnip in New York; Joseph Nasr in Berlin; writing by Richard Meares and David Lewis; editing by Andrew Roche)
Source: http://us.rd.yahoo.com/dailynews/rss/world/*http%3A//news.yahoo.com/s/nm/20110728/wl_nm/us_libya
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