© unkMuammar Gaddafi
Libyan leader Moamer Gaddafi denied Monday he had fled the country, as protests spread to the capital, regime loyalists quit, and fighter pilots defected after being ordered to fire on demonstrators. Khadhafi's comments in a brief television appearance were the first since the protests erupted lastTuesday in the east of the oil-rich north African nation he has ruled for 41 years.

"I am going to meet with the youth in Green Square" in downtown Tripoli, he said, in what state television reported was a live broadcast from outside the 68-year-old strongman's home.

"It's just to prove that I am in Tripoli and not in Venezuela and to deny television reports, those dogs," he said, holding up an umbrella in pouring rain as he headed into a car.

Khadhafi moved to scotch rumours he had fled to Venezuela as the pillars of his regime began to crumble with protesters overrunning several cities, not long after the rulers of neighbouring Egypt and Tunisia were forced out.

The president of Yemen, another ruler who has chalked up more than three decades in power, also defied calls to quit saying he would only exit if defeated at the ballot box.

And a top exiled opposition figure said he planned to return to Bahrain, mounting pressure on the ruling royal family which ordered political prisoners freed in a bid to end the standoff which has forced the Bahrain Formula One Grand Prix to be scrapped.

While there was fresh violence in several Arab cities, the most dramatic events were in Tripoli where heavy gunfire broke out in downtown areas for the first time since the uprising began a week ago.

Residents of two districts in Tripoli told AFP in Cairo by telephone there had been "a massacre," with gunmen "firing indiscriminately" in Tajura district.

Another witness in Fashlum told AFP that helicopters had landed what he called armed African mercenaries in the neighbourhood, who opened fire on anyone in the street, causing a large number of deaths.

Despite signs Gaddafi's power is loosening, the Middle East's longest-ruling leader sent out a warning through his son that he was ready for a fight to the death.

In a rambling televised address, Gaddafi's son Saif al-Islam on Monday warned of a "fight to the last bullet" and said "rivers of blood will run through Libya" if protesters did not accept offers of reform.

But in a sign of deep cracks developing in the regime, Libya's deputy ambassador to the United Nations called for Gaddafi to quit, accusing him of "genocide" and saying he should stand trial for war crimes.

"He has to leave as soon as possible. He has to stop killing the Libyan people," Ibrahim Dabbashi told media at the United Nations in New York.

The UN Security Council will meet Tuesday to discuss the Libya crisis, UN Secretary-General Ban Ki-moon said, noting he had spoken to Gaddafi and urged restraint.

Earlier via his spokesman, Ban said he was "outraged" by reports that Libyan security forces have fired on demonstrators from war planes and helicopters.

US Secretary of State Hillary Clinton also urged Libya to end the "unacceptable bloodshed" and said "the world is watching the situation in Libya with alarm."

Although government restrictions have complicated the task of compiling a tally, Human Rights Watch said 233 had been killed in the uprising while the International Federation for Human Rights (IFHR) put the toll at 300-400.

IFHR head Souhayr Belhassen said several eastern cities, including the second city of Benghazi and Sirte, had fallen to demonstrators after army units formerly loyal to Gaddafi defected.

Media reports said Libya's justice minister, Mustapha Abdeljalil, had also resigned along with Libya's Arab League envoy and Tripoli's ambassador to Delhi as well as a diplomat in Beijing.

Two Libyan fighter pilots -- both colonels -- flew their single-seater Mirage F1 jets to Malta and said they had defected after being ordered to attack protesters in Benghazi, Maltese military told AFP.

The turmoil sent London oil prices soaring close to $107 per barrel, and the Fitch agency downgraded Libya's debt rating.

British energy giant BP said it was preparing to evacuate some staff from Libya, which holds Africa's biggest oil reserves, and French oil giant Total said it was repatriating most of its foreign employees and their families.

The United States also ordered all non-essential personnel to leave Libya.

Yemen's Ali Abdullah Saleh, the region's second longest-ruling leader, is also clinging to power despite a growing clamour for his departure.

"If they want me to quit, I will only leave through the ballot box," Saleh told reporters.

Tens of thousands of protesters took to Yemen streets Monday, including in the capital Sanaa, the southern city of Aden, the northern city of Saada, the western port of Al-Hudaydah and Taez in the south.

According to an AFP tally based on reports by medics, 12 people have been killed and dozens more wounded since February 16 when protests first erupted in Yemen against Saleh, who has been in power since 1978.

While Yemen is the poorest Arab country, wealthy states have also been caught up in the wave of unrest.

In Bahrain, King Hamad ordered Shiite political prisoners freed in response to calls at a large pro-government Sunni rally that pledged allegiance to the al-Khalifa dynasty but also urged him to release prisoners.

Thousands of mainly Shiite anti-government protesters camped out in the central Pearl Square, after calling for a huge demonstration on Tuesday to oust the Sunni Al-Khalifa dynasty which has ruled the Gulf kingdom for centuries.

"No mother can keep her children from coming here," Um Alawi, clad in a full niqab and flanked by her daughters, told AFP. "Sacrifice is today the duty of all Bahrainis."

Hassan Mashaima, leader of Bahrain's opposition Haq movement, told AFP he would return to Manama on Tuesday, despite the threat of terrorism charges.

The kingdom issued a statement saying it would no longer host the Grand Prix on March 13.