(Reuters) - (Adds casualties, details)
By Michael Georgy
BIR AL-GHANAM, Libya Aug 10 (Reuters) - Forces loyal to Muammar Gaddafi and Libyan rebels holding the strategic town of Bir al-Ghanam exchanged rocket fire interspersed with verbal abuse on Wednesday.
"You animal, you scum," one rebel cursed after his comrades managed to cut in on an army radio frequency.
"You dog, you rat. You sold out our country," a Libyan soldier yelled back.
Rebels captured the town on Saturday, breaking weeks of stalemate on this front in Libya's civil war. They plan to advance to the capital, Tripoli, Gaddafi's stronghold located about 80 km (50 miles) north.
Gaddafi forces launched Grad rockets at rebel positions in the small desert settlement and rebels fired back with rockets and machine guns.
Gaddafi himself describes the rebels as rats and says they are criminals inspired by al Qaeda.
Thick white smoke was rising at the edge of Bir al-Ghanam during the fighting.
One rebel was killed and 10 were wounded, doctors said. It was not clear if government forces suffered any casualties.
"Gaddafi's people are trying to get back into the town but we will not let them. No way," said a rebel commander who was sitting in a car monitoring army radio traffic. He paused to insult a soldier on the other end.
"You are a monkey. You will see what we will do to you," he said, chuckling. You are nothing."
Gaddafi's forces are spread out in a copse just beyond Bir al-Ghanam and have conducted several reconnaissance missions back to the town.
The insurgents say they plan to assault government forces holding the nearby town of Zawiyah, which lies 50 km (30 miles) west of Tripoli and is home to many of the rebels fighting here in the desert.
Rebel reinforcements in jeeps with anti-aircraft guns were arriving in Bir al-Ghanam while Gaddafi's forces kept up the pressure. As explosions rocked the town, more skirmishes over the radio network took place.
"Anyone who follows Gaddafi is an ant so you are an ant," said one rebel to a Libyan soldier. The soldiers occasionally played a song praising Gaddafi over the radio network, which said troops are at his disposal.