Israeli troops were on Saturday hunting a suspected Palestinian who killed five members of an Israeli family at their West Bank settlement, officials and media reports said.

An Israeli army spokeswoman told AFP the killer had entered Itamar settlement near Nablus in the north of the West Bank and murdered five people overnight.

Yemeni police firing live rounds and tear gas killed one person and wounded many more Saturday in an attack on anti-regime protesters camping at a main square in the capital.

The dawn assault forced back demonstrators who had breached the limits of a concrete barrier put up by police at Sanaa's University Square, where protesters have been staging a sit-in for almost three weeks.

Libya decided on Friday to "suspend" diplomatic relations with France, Deputy Foreign Minister Khaled Kaaim said at a press conference.

The Libyan government has slammed what it called France's "illegal" decision on Thursday to recognize Libya's rebels and warned that the move could lead to a break in relations.

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.