WRAPUP 7-Heavy fighting as Libyan rebels try to push out
* Rebels, Gaddafi forces exchange fire west of Misrata
* Rebels say at least 10 dead in Misrata shelling
* NATO makes rare daylight Tripoli bombing raid (Adds Gaddafi protest, fighting near Tunisia, official toll)
By Matt Robinson
DAFNIYAH, Libya, June 17 (Reuters) - Libya's rebels tried to push deeper into government-held territory east of the capital Tripoli on Friday and exchanged heavy artillery fire with forces loyal to Muammar Gaddafi near the western city of Zlitan.
The city, 160 km (100 miles) from Tripoli, is the next major town on the Mediterranean coastal road to the capital from the rebel stronghold of Misrata. Capturing it would be a major advance in the rebels' strategy of surrounding the capital and cutting it off from all sides.
A Reuters team in Dafniya, on the outskirts of Misrata, said rebels fired artillery and rocket launchers. Rebels said they aimed to hit Libyan tanks and munitions in Naimah near Zlitan.
"We had a strategy to finish everything today, but some of the fighters think it's a game," a rebel unit commander called Mohammed Ali told Reuters. "They shot when they weren't supposed to shoot and they have ruined it," he added, after rebels took cover at the main Dafniya front from a mortar barrage.
Warplanes could be heard in the skies above, although it was unclear whether there had been air strikes in the area.
NATO planes resumed bombardments of Tripoli on Friday with six loud explosions ringing out in the south of the city.
The rare daytime strikes, which hit the capital before noon, sent columns of thick black smoke into the sky.
State news agency Jana said the strikes killed four people, wounded four more and ruined shops and a stretch of road.
A bomb also hit the Al Fateh University, it said. There was no independent confirmation of these claims.
Gaddafi gave an audio speech broadcast on Libyan TV on Friday in which he vowed to defeat the NATO alliance.
"This is the first time they are facing an armed nation of millions. The alliance will be defeated," he said." "We are in our country and we are determined to stay and defend it ... We are staying, we are staying. Let them even use nuclear bombs".
He called the rebels trying to overthrow him "traitors".
In Misrata, rebel spokesman Ahmed Hassan said 10 civilians had been killed and another 40 wounded when Gaddafi forces shelled the city. The report could not be immediately verified.
The exchanges were the heaviest in the area since last week, when 31 people were killed. At a hospital in Dafniyah, ambulances arrived with at least five badly wounded rebels.
The rebels have said they will not attack Zlitan because of tribal sensitivities, but are recruiting fighters from the town and waiting for the residents to rise up against Gaddafi.
NATO military spokesman Wing Commander Mike Bracken said in a briefing that west of Misrata there were "some positive signs that civilians are unifying against the Gaddafi regime".
"Here the situation is highly charged, but for the time being pro-Gaddafi forces appear unable to strongly counter the anti-Gaddafi forces' incremental advances towards Tripoli."
Bracken said NATO's intensification of airstrikes in Tripoli had resulted in the destruction of crucial command-and-control nodes and military equipment, including ammunition.
Another NATO bombardment struck in the region of Gzayha, on the Tunisian border, after heavy fighting earlier between Gaddafi's troops and rebels, resident Mohamed Nagez said.
NATO STRIKES "HELPFUL"
The rebellion erupted four months ago to the day in the eastern city of Benghazi. NATO intervention has been going on for nearly 13 weeks, longer than many of its backers expected, and strains are beginning to show within the alliance.
Rebel advances towards Tripoli have been slow, while weeks of NATO strikes pounding Gaddafi's compound and other targets have failed to end his 41-year-old rule.
Rebels are fighting on two other fronts: in the east around the oil town of Brega and in the Western Mountains southwest of Tripoli. They have made important gains in the past few weeks, bringing the front closer to Tripoli.
Juma Ibrahim, a rebel spokesman in the Western Mountains town of Zintan, said Gaddafi loyalists were massing in Gharyan, about 120 km (90 miles) southwest of Tripoli.
"Battles continued today at the Tekot area (near Nalut) between pro-Gaddafi forces that used Grad missiles and tanks to shell the positions of rebels," he said, adding NATO strikes in the last 48 hours had been "very helpful".
Ibrahim said Gaddafi forces were also besieging the world heritage-listed old city of Ghadames, some 600 km southwest of the capital on the Tunisia and Algerian border.
"(They) ... have destroyed some Islamic historic ruins ... palaces and forts located in the city's old quarter," he said.
Accounts from Ghadames could not be independently verified.
Around 3,000 Gaddafi supporters chanted slogans, waved his portrait and fired automatic weapons into the air in Tripoli.
"All the people in Libya love Muammar Gaddafi," said Mufta al-Nadawi, 51, a geologist, whose four children were sitting on the roof of his car. "I wanted my children to see this," he added, as gunfire echoed around him.
Gaddafi's son, Saif al-Islam, told an Italian newspaper on Thursday that elections could be held within three months and his father would step aside if he lost. The rebel leadership and the United States swiftly rejected that proposal.
Libyan Prime Minister Al-Baghdadi Ali Al-Mahmoudi cast doubt on this, saying Gaddafi had no interest in "any referendum".
A Russian envoy to Tripoli said the Gaddafi had reiterated his departure was a "red line" that could not be crossed.
Mikhail Margelov, President Dmitry Medvedev's special representative for Africa, said in Tunis on Friday Mahmoudi had also told him representatives of Gaddafi's government had "a sort of communication channel" in Norway, Germany and France.
A French foreign ministry spokesman could not confirm whether talks had taken place, but said that all known figures loyal to the Gaddafi regime had left the country.
The rebels say Gaddafi must step down before any talks. (Additional Reporting by Mariam Karouny in Beirut, Nick Carey in Tripoli, Nick Vincour in Paris, David Brunnstrom in Brussels, Tarek Amara in Tunis, Souhail Karam in Rabat, Maria Golovnina in Benghazi, Sami Aboudi in Cairo, Joseph Nasr in Berlin; Writing by John Irish and Tim Cocks; Editing by Jon Boyle)