Libyan fighters move closer to besieged Bani Walid amid fresh hopes for a negotiated settlement with Gaddafi loyalists.

Libyan fighters are poised for mindaults on two of Muammar Gaddafi's
last remaining strongholds, Bani Walid and Sirte, but renewed
negotiations have raised hopes for a peaceful end to the standoff.

Fighters for the National Transitional Council (NTC) on Monday
exchanged fire with Gaddafi loyalists as they advanced closer to the
besieged city of Bani Walid, and were awaiting orders to launch their
final attack after negotiations over its surrender collapsed a day
earlier.

"Rebels have pushed to within seven kilometres of the centre of Bani
Walid. They exchanged fire with some of Gaddafi's forces," Al Jazeera's
Sue Turton said on Monday, reporting from near the city.

"But they have since retreated a little bit instead of setting up a
defensive position there," she added. "And the reason for that is, we
have more talks".

Rebels said another group had come forward to negotiate, distancing
themselves from those conducting previous talks, our correspondent said.

"The rebels yet again have said they will stall going any further,
they have pulled back and they are waiting yet again to see if they can
come to an agreement."

Troop strength estimate

Abdullah Kanshil, a negotiator for the fighters, said on Sunday that
the earlier talks had broken down after Gaddafi loyalists insisted the
fighters put down their weapons before entering Bani Walid, some 150km
southeast of Tripoli.

On Sunday Turton said the fighters were hoping the people in the town would rise up against supporters of Gaddafi.

Turton reported that fighters outside Bani Walid estimated the number of Gaddafi troops remaining in the town at less than 100.

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"This is aside from the Gaddafi loyalists who we've heard have come
out, who are manning checkpoints ... civilians who have weapons," she
said.

Meanwhile, in Gaddafi's hometown of Sirte, in the east of the country, negotiations also continued for the city's surrender.

Bani Walid and Sirte, along with Sabha deep in the Sahara desert, are
the last pockets of support for Gaddafi whose whereabouts has been a
mystery since he was toppled from power last month.

On Sunday, Al Jazeera's Andrew Simmons, reporting from Al-Saddadah,
southeast of Tripoli, said he had heard reports of fighting within Bani
Walid.

"This could be that that there are sleeper groups in that town [of
Bani Walid] who are very much supporting the revolution and have started
to rise in some parts of the town," he said.

Earlier on Sunday, speaking in the eastern city of Benghazi, Ahmed
Bani, the NTC's military spokesman, said that its fighters were in
control of key strategic points around Bani Walid.

"Soon Bani Walid will be liberated completely," he said.

Chinese arms firms

In another development, media reports on Monday suggested that
Chinese arms firms had offered to sell weapons worth about $200m to
Gaddafi's forces in July.

The Globe and Mail and New York Times newspapers
reported that documents found abandoned in Tripoli indicated that
Chinese companies offered to sell rocket launchers, anti-tank missiles
and other arms to Gaddafi's forces, despite bans on such sales.

China's foreign ministry on Monday acknowledged that Chinese arms
firms had held talks with Libyan officials, but behind the government's
back.

"We have clarified with the relevant agencies that in July the
Gaddafi government sent personnel to China without the knowledge of the
Chinese government and they engaged in contact with a handful of people
from the companies concerned," Jiang Yu, a ministry spokesman, said in
Beijing

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