Libyan rebels battled troops loyal to Moammar Gadhafi outside Ras Lanuf on Friday, finding themselves on the back foot and outgunned a day after the regime recaptured the key oil town.

As the two sides exchanged rocket and shell fire east of town, fighter jets screeched over rebel positions on bombing runs, hitting a building used as a checkpoint and setting ablaze an oil storage tank at a nearby refinery.

Bahraini police fired tear gas at anti-government protesters on Friday as they tried to prevent clashes with armed loyalists and as tensions soared in the tiny Gulf kingdom.

Thousands of demonstrators chanted slogans against the king as they marched toward a square near the royal palace in Manama where a group of pro-regime loyalists waited with clubs, swords and metal pipes.

Western powers ramped up pressure on Moammar Gadhafi Friday, with France calling for targeted strikes if he bombs his people, as a crisis summit exposed an EU rift over how to force the Libyan leader out.

The pivotal summit, capping 48 hours of talks also involving NATO defense ministers and European Union foreign ministers, opened with the 27-nation bloc divided over military action as well as a British-French push for formal recognition of Gadhafi's opponents.

Hundreds of Islamists rallied in Jordan on Friday to demand sweeping government reforms, vowing to step up their protests if their demands are ignored.

Surrounded by a cordon of police, they chanted "The people want regime reforms," and "What is acceptable today will not be tomorrow," as well as "We want the dissolution of parliament."

Libyan embattled leader Moammar Gadhafi threatened Europe on Friday with the withdrawal of Libyan support for the international war on terror and to prevent illegal migration, the official Jana news agency reported.

If "Europe does not support, and ignores, the active role of Libya in the fight against migration and as guarantor of stability in North Africa and all of Africa, Libya will be obliged ... to withdraw its efforts in the battle against terrorism and completely change its stance toward al-Qaida," said a message Jana reported was signed by Gadhafi.

Egypt's new military rulers have ordered the release of two Islamist prisoners jailed over the 1981 assassination of President Anwar Sadat, state TV reported on Friday.

Cousins Tareq and Abbud al-Zomor, members of Egypt's Islamic Jihad, were convicted in 1981 for their involvement in Sadat's murder but were never released after their sentences expired.

Hundreds of Egyptians holding up crosses and Korans massed Friday in Cairo's Tahrir Square to protest against sectarianism, following religious clashes that left at least 13 people dead.

"Muslims and Christians are one," chanted flag-waving protesters in the swelling crowd, as others held up banners depicting an entwined cross and crescent.

Oil kingpin Saudi Arabia braced Friday for protests calling for political and economic reforms a day after witnesses said police shot and wounded three Shiite demonstrators.

Online activists using the Facebook and Twitter have called for a "Day of Rage" and a "Saudi March 11 revolution" demanding a fully elected parliament and ruler in this conservative Islamic monarchy.

The six Gulf Arab states vowed on Thursday to deal "decisively" with threats to any member's security and set up a $20 billion development fund for Bahrain and Oman which were hit with protests.

"The Gulf Cooperation Council (GCC) believes that any threat to the security of any member state harms the security of all states and will be dealt with decisively and immediately, without hesitation," they said in a statement read out at the end of a meeting in Riyadh.

A Greek military plane carrying three Dutch soldiers held by Libya after a botched attempt to free civilians arrived in Athens Friday, an Agence France Presse photographer said.

The plane touched down at Athens International Airport.