Muammar Gaddafi's attempts to crush a revolt against his four-decade rule have killed as many as 1,000 people and split Libya, Italy's Foreign Minister said on Wednesday.
In the eastern city of Benghazi, cradle of the revolt against Gaddafi, people let off firecrackers and honked their horns to mark the end of days of bloodshed there.
With much of the east said to be under control of the protesters, an empty jail burned in Benghazi and Britain's Sky News showed footage of anti-aircraft missiles at what it said was an abandoned military base near Tobruk.
As countries with strong business ties to Africa's third largest oil producer scrambled to evacuate their citizens, and residents of the capital lay low for fear of pro-Gaddafi gunmen, France became the first state to call for sanctions.
I would like the suspension of economic, commercial and financial relations with Libya until further notice, President Nicolas Sarkozy said.
But in the latest sign of international division over how to deal with Gaddafi, the prime minister of Qatar said he did not want to isolate Libya, where several senior officials have declared their backing for protests that began about a week ago.
Protesters have taken over the eastern, oil producing region of the country, Interior Minister Abdel Fattah Younes al Abidi and a senior aide to Gaddafi's influential son Saif were the latest to change sides.
I resigned from the Gaddafi Foundation on Sunday to express dismay against violence, Youssef Sawani, executive director of the foundation, said in a text message sent to Reuters.
Gadaffi has deployed troops to the west of the capital to try to stop a revolt that started in the east from spreading. In the east, many soldiers have withdrawn from active service. abandoned military base near the eastern city of Tobruk.
Much of the country is shut down, including up to a quarter of oil output, prompting fears the crisis could stall global economic recovery.
Gaddafi, once respected by many Libyans despite his repressive rule, called for a mass show of support on Wednesday, but only around 150 people gathered in Tripoli's central Green Square, carrying the Libyan flag and Gaddafi's portrait.
Most streets were almost deserted at a time when they are normally packed with rush-hour traffic. A handful of cafes appeared to be the only businesses open despite government appeals for a return to work sent to subscribers of Libya's two state-controlled mobile phone companies.
Lots of people are afraid to leave their homes in Tripoli and pro-Gaddafi gunmen are roaming around threatening any people who gather in groups, Marwan Mohammed, a Tunisian, said as he crossed Libya's western border into Tunisia.
An estimated 1.5 million foreign nationals are working or travelling in Libya and a third of the population of seven million are immigrants from sub-Saharan Africa.
Witnesses described scenes of chaos as people tried to leave.. It's a Biblical exodus, said Italian Foreign Minister Franco Frattini, predicting several hundred thousand would seek refuge in Italy.
A British oil worker said he was stranded with 300 other people at a camp in the east of Libya, where he said local people had looted oil installations.
We are living every day in fear of our lives as the local people are armed, James Coyle told the BBC. They've looted ... the German camp next door, they've taken all their vehicles, all our vehicles ... everything. So we are here desperate for the British government to come and get us.
The British foreign office had no immediate comment.
Italian Foreign Minister Franco Frattini said he understood the eastern region of Cyrenaica, where much of Libya's oil is located, was no longer under Gaddafi's control after violent attempts to crush protest there and elsewhere in the country.
Frattini said he could not be sure how many had been killed, adding: We believe that estimates of about 1,000 are credible.
Human Rights Watch had estimated 233 had been killed, with 62 killed in Tripoli in the past two days. Opposition groups had put the figure far much higher.
The U.N. Security Council condemned the use of violence and called for those responsible for attacks on civilians to be held to account and British Prime Minister David Cameron called for a formal resolution.
The Libyan regime is using appalling levels of force and violence against its own people including using aeroplanes that are shooting at people, he said.
Protests in Libya's neighbours Egypt and Tunisia have ousted entrenched leaders, but Gaddafi, who took power in a military coup in 1969 and has ruled the mainly desert country with a mixture of populism and tight control, is still fighting back.
On Tuesday, he declared he was ready to die a martyr in Libya. I shall remain here defiant, he said on state television, dismissing protesters as rats and mercenaries.
The turmoil in Libya, which stretches from the Mediterranean into the Sahara and pumps nearly 2 percent of world oil output, sent Brent crude futures above $108 a barrel to a 2 1/2 year high on Tuesday. They were around $107 early on Wednesday.
Up to a quarter of Libya's oil production has been closed, based on calculations from companies operating in the country.
Fears the unrest could spread to other oil producing nations and choke supplies knocked world share prices further off a recent 30-month high and fanned concerns inflation could hamper a global economic recovery.
It is likely that the country will experience a prolonged period of violent instability, with a potential for full blown civil war, Eurasia Group analysts said on Tuesday.
The White House said global powers must speak with one voice in response to the appalling violence in Libya and U.S. Secretary of State Hillary Clinton said the United States would take appropriate steps in time.
But Washington has little leverage over Libya, which was a U.S. adversary for most of Gaddafi's rule until it agreed in 2003 to abandon a weapons-of-mass-destruction programme and moved to settle claims from the 1988 Lockerbie bombing.
Gaddafi said he would call on people to cleanse Libya house by house unless protesters surrendered. Chase them, arrest them, hand them over, he said.
In a sign of his growing isolation, Libyan diplomats at the United Nations and several countries broke ranks.
A government spokesman accused international media of exaggerating the gravity of the situation in the country.
But Al Jazeera television aired video showing Interior Minister Abidi at his desk reading a statement urging the army to support the people and their legitimate demands and swathes of Libya are no longer under government control.
In Sabratah, 50 miles (80 km) west of the capital, the Libyan army had deployed a large number of soldiers after protesters destroyed almost all the security services offices, the online Quryna newspaper said.
Eastern Libya is no longer under Gaddafi's control, rebel soldiers in the city of Tobruk told a Reuters reporter there.
In al-Marj, a Reuters correspondent said bursts of gunfire echoed around the town, scarred by the revolt. Down with the Tyrant was scrawled on one charred building.
Military officers in Tobruk, still in uniform but no longer allied to Gaddafi, said he no longer controlled the region and witnesses said Benghazi, a focus of the revolt. was also calm.