Libyan government forces destroyed four fuel storage tanks and set several others ablaze in rebel-held Misrata, dealing a blow to the port city's ability to withstand a government siege, rebels said.

The attack on the western city came as artillery rounds fired by forces loyal to Muammar Gaddafi fell in Tunisia in an escalation of fighting near the border with rebels trying to end Gaddafi's rule of more than four decades.
   
Misrata, the last remaining city in the west under rebel control, has been under siege for more than two months and has witnessed some of the war's fiercest fighting.

Rebels gave varying accounts of the bombardment but said it hit fuel used for export as well as domestic consumption.   

"Four (fuel) tanks were totally destroyed and a huge fire erupted which spread now to the other four. We cannot extinguish it because we do not have the right tools," rebel spokesman Ahmed Hassan told Reuters.

"Now the city will face a major problem. Those were the only sources of fuel for the city. These tanks could have kept the city for three months with enough fuel," he said by telephone.

Video of the incident posted on YouTube by Libyan students in Misrata showed firefighters turning water hoses on a raging fire in a vain attempt to extinguish it.

Government forces last month flew at least one helicopter reconnaissance mission over Misrata, according to rebels.   

Nato coalition aircraft have been bombing Libyan government military targets and enforcing a no-fly zone under a UN resolution. Western and Arab countries this week agreed to provide rebels with millions of dollars in non-military aid to help them keep services and the economy running.   

Rebels have long been demanding more heavy weapons to take on the Libyan leader's better-armed and trained forces. 

The head of the rebel forces in eastern Libya retracted an assertion by a rebel spokesman that Italy had agreed to supply them with weapons to help in their fight to oust Gaddafi. "We have not received any weapons, not from Italy nor from any other country," Abdel Fattah Younes told Al Jazeera television. "Maybe one of the brothers failed to express himself properly ... we apologise to Italy on behalf of the brothers in the National Council."    

A spokesman for the rebels' Transitional National Council had told a news conference in Benghazi earlier in the day that weapons would be provided to the insurgents soon.

In Rome, a Foreign Ministry spokesman said no such agreement had been reached. Italy has backed the rebels, formally recognising the transitional council as the only legitimate representatives of the country, but it is unlikely it would go further than other countries in the anti-Gaddafi coalition. - Reuters