At least 40 people have been killed in a week of ethnic clashes in southern Libya between rival gunmen from the Toubou and Tuareg minorities, a local official said.

The latest fighting centered on the oasis city of Sabha, the largest in the Libyan Sahara, the official said.

Four Italians working for a construction company have been kidnapped in conflict-torn Libya, the foreign ministry said in a statement Monday.

They were around the premises of Italian oil giant ENI in the region of Mellitah, to the west of Tripoli, when they were snatched, the ministry said.

Two loyalist soldiers were killed Monday in clashes with armed groups in Libya's restive city of Benghazi, a pro-government news agency said, a day after five elderly men died in shelling.

LANA news agency close to the internationally recognized government said the soldiers died during fighting in the Bouatni district of southeastern Benghazi. It gave no further details.

The jihadist Islamic State group acknowledged losing control of the city of Derna in eastern Libya, promising to "avenge" its fighters, in a video posted on Twitter.

The 10-minute video posted late Saturday by the "media office of the province of Barqa" in Libya confirmed the loss of Derna after clashes.

The United Nations and European states on Sunday welcomed a U.N. peace deal initialed by some Libyan factions but not by the opposition as a step towards restoring stability there.

Plunged into chaos since the 2011 overthrow of strongman Moammar Gadhafi, Libya has two parliaments and governments vying for power, as a slew of armed groups battle for control of its oil wealth.

Libyan political parties and members of civil society initialed a UN-proposed peace accord in Morocco on Saturday, despite the absence of a rival parliament not recognized by the international community.

"This is a step, but it is really an important step along the path to peace," UN envoy Bernardino Leon said at a ceremony in the Moroccan resort of Skhirat marking the agreement.

At least 14 people were killed in battles in Libya's second city Benghazi between militiamen and forces loyal to the internationally recognized government, hospital officials said on Thursday.

The fighting erupted Wednesday morning in the center of the city, cradle of the 2011 NATO-backed uprising that toppled and killed veteran president Moammar Gadhafi, the officials said.

President Barack Obama has tapped a career diplomat with extensive experience in global hot spots to head the sensitive post of ambassador to Libya.

If the nomination is approved, Peter Bodde will replace Deborah Jones, who succeeded Christopher Stevens, who was killed in a 2012 attack on an American mission in Benghazi, Libya.

Libya's unrecognized government on Monday announced a restructuring of its armed forces into 11 brigades including militiamen who fought in the country's 2011 revolution.

Prime minister Khalifa Ghweil said in a statement that the aim of the reforms was to establish a 5,000-strong army integrating heavily armed former rebel forces.

Lawless Libya has become a magnet for radical militants who receive weapons training in jihadist camps before launching deadly attacks in other countries, like last week's beach massacre in Tunisia.

The oil-rich North African country bordering Tunisia has rival governments and parliaments as well as a slew of armed groups vying for power in the aftermath of its 2011 uprising that toppled dictator Moamer Kadhafi.