TRIPOLI — Chinese arms firms offered to sell weapons worth about $200 million to Libyan leader Moammar Gadhafi's beleaguered forces in July, two newspapers reported, compounding pressure on Beijing's brittle ties with the rebels who have ousted him.

Rebel forces control most of the oil-rich North African nation and are already setting up a new government, but Gadhafi and his staunchest allies remain on the run and enjoy support in several central and southern areas, including the desert town of Bani Walid and the fugitive leader's hometown of Sirte.

Forces of the National Transition Council (NTC) were poised for an assault on Bani Walid after negotiators failed to persuade Gadhafi loyalists to abandon the town.

Many have speculated that Gadhafi is hiding somewhere around Sirte, Bani Walid or the loyalist town of Sabha, deep in the Libyan desert. He and his son Seif al-Islam have tried to rally supporters in defiant audio recordings broadcast on the Syrian-based Al-Rai television station but no concrete information about their whereabouts has emerged.

Sense of normality in capital In Tripoli, life has started returning to normal after last month's fighting and a Muslim holiday last week. Traffic has become heavy as fuel supplies improved. Cafes are busy and offices have begun opening.

Officials with the NTC have announced plans to bring their heavily armed fighters under control and try to integrate thousands of them into the police force and find jobs for others.

Officials said there would also be retraining and reintegration schemes for those who fought for Gadhafi.

The disintegration of Gadhafi's rule after a six-month war has left a security vacuum in Libya, with no state security forces. There are also large numbers former rebel fighters who are not part of any formal structure, and huge quantities of unsecured weapons.

http://www.msnbc.msn.com/id/44396643/ns/world_news-mideast_n_africa...