TRIPOLI: A Libyan fighter said rebels had retaken the heart of the closest city to the capital from forces loyal to Muammar Gaddafi Wednesday evening in some of the fiercest fighting in almost three weeks of clashes. Zawiyah appeared to change hands twice during the day as Gaddafi tried to crush the uprising against him by bombarding the western town and a series of oil towns in the rebel-held east. “Thanks to Allah we are sitting in the square now,” the fighter, who gave his name as Ibrahim, said by telephone after earlier reporting his forces had pulled back from the square. “This is a death or life battle for us, we have nothing to do now but to fight him,” he said. A doctor in the town said earlier many dead lay in the streets, including old people, women and children, with at least 40 killed, probably many more. He also said the rebels had been driven from the center earlier in the day. Al Jazeera television said several members of Gaddafi's forces were killed in Zawiyah, including a general and colonel. The counteroffensive by Gaddafi has halted the rebels' advance in the east, where they were forced to withdraw from the frontline town of Bin Jawad after coming under heavy shelling. “We came into Bin Jawad but gunboats fired on us so we withdrew,” one fighter, Adel Yahya said. Rebel Colonel Bashir Abdul Qadr appeared unsure whether naval vessels had been used. “We had bombing from the direction of the sea,” he said. At the same time, the Libyan government appeared to be putting out feelers toward Western governments who have tried to isolate Gaddafi with financial sanctions and are discussing further measures to try to stop the violence and force him out. The Libyan regime offered a nearly $500,000 bounty for the capture of the chairman of the rebel National Council, Mustafa Abdel Jalil, state television announced. “The General Administration for Criminal Investigations is offering a reward of 500,000 Libyan dinars ($410,000) for any person who captures and hands over the spy named Abdel Jalil and a reward of 200,000 Libyan dinars for anyone who provides information leading to his capture,” the television said. Abdel Jalil is a former justice minister and one of the first high-profile Libyans to defect from the four-decade regime of Libyan strongman Muammar Gaddafi when the uprising began. Libyan government emissaries appeared to have flown to Brussels to talk to European Union and NATO officials meeting Thursday and Friday, Italian Foreign Minister Franco Frattini said, suggesting the situation was very fluid. A Gaddafi envoy met Portugal's foreign minister Wednesday to explain Tripoli's view of the conflict, the Portuguese Foreign Ministry said. There were no details of the kind of message the emissaries were bringing. A senior aide to Gaddafi arrived in Cairo Wednesday in what Italy said was an attempt to open contacts with the Arab League as the international community sought ways to end the fighting in Libya. Egyptian officials refused to comment on the visit but Italy's Foreign Minister Franco Frattini said in Rome that the move showed “the Libyan regime is moving toward contact” with the international community. Frattini said the official, identified in Cairo as Maj. Gen. Abdelrahman Al-Zawi, was carrying a letter from the embattled Libyan leader to the Cairo-based Arab League, whose foreign ministers meet here on Saturday to discuss a no-fly zone over Libya. He said the flight which brought Zawi from Tripoli was also carrying “probably the defense minister... bringing Egypt's transition government a letter from Gaddafi stating his intention to meet with the Arab League”. On the other hand, French President Nicolas Sarkozy will on Thursday meet two envoys from Libya's opposition seeking help against Gaddafi. Mahmud Jibril and Ali Al-Essawi of Libya's rebel national council will discuss “the general situation in Libya, in particular the humanitarian situation and the action of Libya's national transition council,” the French presidency announced Wednesday. It will be the first meeting of a head of state with representatives of the Libyan opposition and comes on the eve of an emergency European Union summit in Brussels convened over the Libyan crisis. Meanwhile, rebels in the east faced a new barrage of artillery fire on their desert frontline outside the oil port of Raslanuf. Dr. Gebril Hewadi of the Benghazi medical management committee told Reuters television at least 400 people had been killed in eastern Libya since clashes began there on Feb. 17, with many corpses yet to be recovered from bombing sites. An engineer working from the Bin Jawad port told Al Jazeera he had seen Gaddafi's warplanes strike the facilities, including destroying four storage tanks and power and water plants, the first time oil facilities have been hit. The eastern rebels renewed an appeal for outside powers to impose a no-fly zone to at least shield them from air attacks. US Secretary of State Hillary Clinton made it clear imposing a no-fly zone was a matter for the United Nations and should not be a US-led initiative. The White House said, however, it felt a United Nations arms embargo on Libya contained the flexibility to allow the rebels to be armed if such a decision were made. Gaddafi has said he would die in Libya rather than flee. But that has failed to stem speculation on his plans. A Libyan-born analyst said Gaddafi's inner circle had approached countries in Africa and Latin America about providing him refuge in the event he had to flee. “It's provisional, it's a testing of the waters, it's just preparing for the future,” said Noman Benotman, who has contacts among Libyan security officials. “It may also be a deception, to try to unsettle the international community. But the contacts definitely happened.” The government promised several times to escort foreign journalists into Zawiyah, 50 km west of Tripoli, Wednesday but repeatedly called off the planned visit.