Gun battles rage in Libya, Gaddafi fights on

Residents and former soldiers of Muammar Gaddafi celebrate inside a military compound in Benghazi yesterday. REUTERS/Suhaib Salem

BENGHAZI, Libya, (Reuters) – Forces loyal to Muammar  Gaddafi hit back at rebels holding towns near the Libyan capital  yesterday but there was no sign they had broken the momentum  of opposition gains that have been closing in around Tripoli.

With a spike in oil prices threatening prospects for a  global economic recovery, the United States said it was keeping  all options open, including sanctions and military action in  response to the Libyan government’s crackdown on the uprising.

President Barack Obama called the leaders of Britain, France  and Italy to discuss rescuing citizens trapped by the violence  as well as holding Gaddafi to account. But fully