BREGA, Libya (Reuters) - A Western air strike destroyed two of Muammar Gaddafi's military vehicles in the east Libyan oil town of Brega on Tuesday allowing rebels to edge forward, but diplomatic efforts to end the war remained stalled.
The frontline has been bogged down around Brega for nearly a week with Gaddafi's advantage in tanks and artillery canceled out by NATO-led air strikes which effectively back the rebels.
Neither the rebels, nor Western powers will accept Libyan government offers to hold free elections and install a new constitution due to its insistence that Gaddafi stay in power.
But after a series of rapid rebel advances followed by headlong retreats, the insurgents have at least held their ground in Brega, putting their best trained forces in to battle for the town and keeping the disorganized volunteers away.
"An air strike hit two of the enemies' vehicles," a rebel army officer in military uniform who gave his name as Colonel Abu Mohammed told Reuters.
The remains of the two trucks mounted with heavy machine guns smouldered near the entrance to the eastern residential area of New Brega, their burning tires giving off a cloud of acrid smoke. Rebels trucks drove past toward the center of Brega hauling multiple rocket launchers and heavy machine guns.
REBEL OIL EXPORT
The rebels are also to receive a boost with the loading of their first oil shipment due to begin on Tuesday. The tanker Equator, which can carry 1 million barrels of crude, was due to arrive at the eastern Libyan port of Marsa el Hariga, near Tobruk, satellite ship tracking data showed on Monday.
A full load would be worth more than $100 million, helping the rebel leadership to pay salaries and bolster its image as a potential government capable of taking over.
The rebel leadership says Qatar agreed to market oil from east Libyan fields no longer under Gaddafi's control after the Gulf state recognized the revolutionary council inBenghazi as Libya's legitimate government.
Italy, a major investor in Libyan oil, also sided with the rebels on Monday, promising them weapons and demanding that Gaddafi and his family, who enjoyed warm ties withItalian Prime Minister Silvio Berlusconi, leave Libya.
"It rectifies a wrong," said Jalal el-Galal, a member of the rebel media committee in Benghazi. "Of course, Berlusconi is close to Gaddafi, but that doesn't mean that Italy is. It is important that Italy should take this step because of our natural ties."
NO BREAKTHROUGH, TURKEY SAYS
Diplomatic efforts to end the conflict appeared to be going nowhere. Government spokesman Mussa Ibrahim said Libya was ready for a "political solution" with world powers.
"We could have any political system, any changes: constitution, election, anything. But the leader has to lead this forward," he told reporters when asked about the content of negotiations with other countries.
Libyan Deputy Foreign Minister Abdelati Obeidi ended a trip to Greece, Turkey andMalta to set out the government position with no breakthrough achieved.
Turkey is expecting an envoy to visit from the opposition in the coming days and is listening to both sides.
"Both sides have a rigid stance," a Turkish Foreign Ministry official said after Obeidi's visit. "One side, the opposition, is insisting that Gaddafi should go. The other side is saying Gaddafi should stay. So there is no breakthrough yet."
Maltese Prime Minister Lawrence Gonzi told the Libyan envoy on Monday that Gaddafi and his family must relinquish power.
Gonzi also expressed "disgust" with what was happening in Libya's third largest cityMisrata, which is being pounded by Gaddafi forces. Witnesses have told of a "massacre" by Gaddafi forces in Misrata, the only major town in western Libya where the revolt that began seven weeks ago has not been crushed.
Some residents in the capital Tripoli, angered by fuel shortages and long queues for basic goods caused by a popular revolt and Western sanctions and air strikes, began openly predicting Gaddafi's imminent downfall.
"People from the east will come here. Maybe in two weeks," said one entrepreneur who asked that his name not be used for fear of reprisals. "But now, people are afraid."
(Additional reporting by Angus Macswan in Benghazi, Ibon Villelabeitia in Cairo; Writing by Jon Hemming; Editing by Giles Elgood)