Libya marks Eid, rebels proclaim 'right' to kill Gaddafi

Libya marked the first Eid al-Fitr feast in 42 years free of Muammar Gaddafi's yoke on Wednesday, as rebels declared a "right to kill" the fugitive strongman and gave his forces three days to surrender.

Diplomats, meanwhile, said the EU will lift sanctions against Libya's ports and other economic entities including oil firms, as some 60 nations prepared for a Paris aid conference on the war-battered country's future administration.

East of Tripoli, rebels battled loyalists in sporadic clashes on the road between the towns of Zliten and Bani Walid, where the insurgents believe Gaddafi could be hiding.

Tens of thousands gathered at Tripoli's landmark Martyrs' Square to mark the start of the Muslim three-day holiday that follows the end of the Ramadan fasting month, kneeling in prayer as they rejoiced at Gaddafi's fall.

Men, women and children poured from dawn into the seafront site -- formerly known as Green Square -- decked out in their holiday best, as women ululated in triumph and spontaneous cries of joy erupted.

"This is the best holiday of my life," said Adel Masmoudi, who at 41 was born the year Gaddafi seized power.

An imam leading the prayer urged all Libyans to stand united and hailed the ouster of "the tyrant Gaddafi", prompting jeers from the crowd at the mention of the strongman's name.

With most of Libya overrun by NATO-backed rebel fighters and Gaddafi's wife, daughter and two sons taking shelter in neighbouring Algeria, the whereabouts of the 69-year-old colonel himself remained a mystery.

"The information I have is this: it is 80 percent certain that Gaddafi is still in Libya," Omar Hariri, head of the rebels' military affairs, told AFP.

He said rebels suspected he was hiding either in Bani Walid, southeast of Tripoli, or on the outskirts of the capital.

"We think he is in Libya," said Ahmed Darrad, who is charged with overseeing the interior ministry until a new government is elected.

"It is our right to kill him," Darrad told AFP late Tuesday.

"He is killing us. He is a criminal and an outlaw. All over the world if the criminal does not surrender, it is the right of law enforcers to kill him."

Catching Gaddafi is a primary goal for the rebels although negotiations are still under way for the surrender of regime loyalists in Sirte, hometown of the strongman.

Mustafa Abdel Jalil, chief of the rebels' National Transitional Council (NTC), said in an interview published Wednesday by Egypt's state-owned Al-Ahram newspaper he wanted Gaddafi arrested alive so he could be brought to justice.

Abdel Jalil on Tuesday gave the loyalists until Saturday to surrender or face the "final battle" of a more than six-month uprising against Gaddafi's autocratic regime.

Talks are under way with civic and tribal leaders in a number of towns, including Sirte, in an effort to avoid bloodshed, but more fighting could be imminent as rebel fighters massed to the east and west of the town.

"From Saturday, if no peaceful solution is in sight on the ground, we will resort to military force," Abdel Jalil said, warning that Gaddafi "is not finished yet."

NATO also said the influence of Gaddafi, who has vowed no surrender to rebels he has dismissed as "rats," remained potent despite being on the run.

"He is displaying a capability to exercise some level of command and control," Colonel Roland Lavoie, military spokesman of the NATO air mission in Libya, told a news briefing from his headquarters in Naples.

Lavoie said NATO air strikes were now focused along the corridor between Bani Walid and Sirte.

In its latest operational update issued on Wednesday, NATO said its warplanes had hit a command and control facility, three tanks and 12 other vehicles, as well as a military facility, command post and radar at Sirte.

It said it also destroyed a munitions dump and a number of military facilities and weapons at Bani Walid.

Rebel military spokesman Colonel Ahmed Omar Bani told a news conference in Benghazi that his forces were "ready for a final military battle," describing Saturday as "zero hour."

"We have been given no indication of a peaceful surrender... We continue to seek a peaceful solution, but on Saturday we will use different methods against these criminals," he said.

The rebels' fledgling new administration received a major boost to its finances with clearance from a UN sanctions committee for Britain to release $1.6 billion in seized regime assets to pay for emergency relief.

In Moscow, reports said that Mikhail Margelov, the envoy of President Dmitry Medvedev for Africa, will attend Thursday's conference for "Friends of Libya" in Paris.

Russia had earlier appeared to be keeping its distance from the conference, after refusing to join the international Contact Group on Libya during the conflict and vehemently criticising the Western air campaign.

Thursday's conference is expected to discuss funding for Libya as well as police training and diplomatic recognition for its new rulers.

The Paris meeting will also see talks between UN Secretary General Ban Ki-moon, his post-conflict planner Ian Martin and rebel chief Abdel Jalil.

Martin said in New York the rebels will need outside help establishing a democracy they have never known.

"It's very clear that the Libyans want to avoid any kind of military deployment of the UN or others," he said, but the United Nations could organise an international force of police trainers and monitors.

Diplomats said the European Union is expected by Friday to lift sanctions against Libya's six ports and 22 other economic entities, including three or four oil companies.

Former colonial power Italy said it would reopen its embassy in Tripoli on Thursday and would be unblocking 500 million euros ($722 million) for the NTC.

France reopened its diplomatic mission in the Libyan capital on Monday, while Britain said it was preparing to follow suit.