WRAPUP 8-Price on Gaddafi's head as fighting goes on

Wed Aug 24, 2011 3:26pm EDT

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(Adds Gaddafi daughter address, U.S. resolution at UN)

* Rebels say Gaddafi forces fight on, think Gaddafi in Tripoli

* Gaddafi says withdrawal was tactical; whereabouts unknown

* Rebel leaders to meet Western envoys in Qatar

By Missy Ryan and Ulf Laessing

TRIPOLI, Aug 24 (Reuters) - Libya's new masters offered a million-dollar bounty for the fugitive Muammar Gaddafi on Wednesday, after he urged his men to fight on in battles across the capital.

A day after rebel forces overran his Tripoli headquarters and trashed symbols of his 42-year rule, scattered pockets of loyalist diehards kept the irregular fighters at bay as they hunted Gaddafi and his sons. Rebels also reported fighting deep in the desert and a standoff round Gaddafi's tribal home town.

In Tripoli, rockets and gunfire kept two million civilians indoors. Most were anxious but hopeful the war would soon end, and with it worsening shortages of food, water and medical supplies -- both for hundreds of wounded and for the sick.

"Gaddafi's forces and his accomplices will not stop resisting until Gaddafi is caught or killed," said Mustafa Abdel Jalil, head of the rebels' National Council, who offered amnesty to any of his entourage who killed the fallen strongman and announced a reward worth over $1 million for his capture.

"The end will only come when he's captured, dead or alive," Abdel Jalil said in the eastern rebel stronghold of Benghazi.

Until then, he said, Gaddafi would not give up easily and could still unleash a "catastrophic event". In a poor-quality audio tape broadcast by satellite overnight, Gaddafi, 69, urged Libya's tribes to "exterminate traitors, infidels and rats".

There was no clear indication of where Gaddafi is, though his opponents surmised he was still in or around Tripoli after what Gaddafi himself described as a "tactical" withdrawal from his Bab al-Aziziya compound before it was captured on Tuesday.

But Western leaders and the rebel government-in-waiting lost no time readying a handover of Libya's substantial foreign assets. Funds will be required to bring relief to war-battered towns and to develop oil reserves that can make Libya rich.

Washington was to submit a U.N. resolution to release an immediate $1.5 billion for humanitarian aid. More will follow. While Libya is rich in oil, four decades of rule by personality cult has left it with few institutions of normal governance.

"DELUSIONAL"

Abdel Salam Jalloud, a close ally who switched sides last week, said Gaddafi planned to drop out of sight and then launch a guerrilla war:

"He is sick with power," he said. "He believes he can gather his supporters and carry out attacks ... He is delusional. He thinks he can return to power."

Gaddafi's spokesman Moussa Ibrahim threatened in another broadcast: "We will turn Libya into a volcano of lava and fire under the feet of the invaders and their treacherous agents."

But there were signs other Gaddafi supporters are giving up on him, following a stream of defections during the six months of the uprising. At Tripoli's Rixos hotel where loyalist gunmen had been preventing nearly 40 foreigners, mostly journalists, from leaving, gunmen relented on Wednesday and let them go.

After by far the bloodiest of the Arab Spring revolts that are transforming the Middle East and North Africa, there were clear indications, too, of new threats of disorder. Four Italian journalists had been kidnapped near Zawiya, between Tripoli and the Tunisian border.

Western officials also fear weapons, including anti-aircraft missiles and nuclear material capable of making a "dirty bomb", could be taken from Gaddafi's stocks and reach hostile groups.

Imposing order and preventing rivalries breaking out across tribal, ethnic and ideological lines among the disparate rebel factions are major concerns of both the new leaders and of their Western backers, who are working to avoid the anarchy and bloodshed that followed the overthrow of Iraq's Saddam Hussein.

Meeting rebel government chief Mahmoud Jibril in Paris, French President Nicolas Sarkozy was the first Western leader to bask in the gratitude of Gaddafi's opponents, who noted how Sarkozy took a lead in pushing for NATO military intervention.

Paris, Sarkozy said, will host a "Friends of Libya" summit next Thursday, Sept. 1. It would include Russia and China, both critics of the Western bombing campaign which have been concerned at now losing out on business deals with the rebels.

Jibril said the date of the conference, coinciding with the anniversary of the 1969 military coup that brought Gaddafi to power, would be "a new symbol for Libyans" in the greater battle that lay of them, "the battle for reconstruction".

France, Britain and the United States were working on a new United Nations resolution to ease sanctions and asset freezes imposed on Libya when Gaddafi was in charge. Rebels also spoke of bringing back workers to restart oil export facilities soon.

GUNFIRE AND SHORTAGES

Fighters who swept in to Tripoli at the weekend, uniting several fronts and a variety of opposition groups, were trying to establish order in the city, but faced pockets of resistance and there were signs of looting. Snipers kept up fire from high buildings, including around Gaddafi's compound. Rebels blasted back with anti-aircraft guns mounted on pickup trucks.

"There are still many snipers in eastern Tripoli," said one rebel fighter. "We'll finish them off but it'll take time."

Government buildings were being stripped of anything of value. At the Bab al-Aziziyah complex, fighters were still going through buildings and coming out with sniper rifles and ammunition, which they distributed among their ranks.

Elsewhere, there was straightforward looting. At one government building, people were coming out with carpets and boxes full of light fittings. Some of the looters had weapons but they did not appear to belong to any organised unit.

Medical supplies, never especially plentiful, were reaching critical levels in many places where some of the hundreds of casualties from the recent fighting were being treated. Shooting in the street also kept doctors away from work.

"There is a real catastrophe here," said a rebel spokesman. Appeals were made in the streets and mosques for urgent help. There is also a dangerous shortage of blood at hospitals."

One Tripoli resident, who could still not break the fearful habits of the Gaddafi era and let his name be published, said he and his neighbours had stocked up on food and water when fighting began. But these were beginning to run out: "We hope things will be available soon as the markets are empty."

Another resident also reported shortages of food, a big focus of family life during the holy month of Ramadan which ends next week: "In our main street there is only one bakery open and there is a big queue. Hundreds of people."

But there was also optimism. The first man said: "People do not pay attention to what Gaddafi says. They are saying: 'He is in his last moments. He has no more power to do anything.'

"People are shaking hands with the revolutionaries at the checkpoints. People are happy, they are excited."

The rebels, many of whom were once supporters of Gaddafi, stressed the wish to work with former loyalists and officials and to avoid the purges of the ousted ruling elite which marked Iraq's descent into sectarian anarchy after 2003.

Gaddafi's tribal home town of Sirte, on the coast between Tripoli and Benghazi, was still not in the hands of the new leadership who have despatched forces there. Nor was the southern city of Sabha, where the rebels reported fighting.

DIPLOMACY

But Gaddafi was already history in the eyes of the rebels and their political leaders held high-level talks in Qatar on Wednesday with envoys of the United States, Britain, France, Turkey and the

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