Muammar Gaddafi's increasingly desperate 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.
As countries with strong business ties to Africa's third largest oil producer scrambled to evacuate their citizens, and fear of pro-Gaddafi gunmen emptied the streets of the capital Tripoli, 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.
A senior aide to Gaddafi's influential son Saif was 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.
Gaddafi called for mass demonstrations by his supporters on Wednesday to try to cling to power. In the morning, only around 150 people gathered in Tripoli's central Green Square, carrying the Libyan flag and holding up 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.
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.
On Tuesday, Gaddafi declared he was ready to die "a martyr" in Libya. "I shall remain here defiant," he said on state television, refusing to bow to calls to step down from some of his own ministers, soldiers and protesters.
Popular protests in Libya's neighbours Egypt and Tunisia have toppled entrenched leaders, but Gaddafi, who has ruled the mainly desert country with a mixture of populism and tight control since taking power in a military coup in 1969, said he would not be forced out.
In New York, the U.N. Security Council condemned the use of violence and called for those responsible for attacks on civilians to be held to account.
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 at $107.08 by 1000 GMT on Wednesday.
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 called protesters "rats and mercenaries" who deserved the death penalty in his 75-minute speech. He said he would call on people to "cleanse Libya house by house" unless protesters surrendered.
He urged Libyans to take to the streets to show their loyalty. "All of you who love Muammar Gaddafi, go out on the streets, secure the streets, don't be afraid of them ... Chase them, arrest them, hand them over," he said.
Libya's official news agency quoted him as telling Italian Prime Minister Silvio Berlusconi that "Libya is fine, its people are ... holding on to its security".
But British Foreign Secretary William Hague said there were "many indications of the structure of the state collapsing in Libya". Britain and other nations have said they are trying to evacuate nationals from Libya by plane an ship.
In a sign of his camp's growing isolation, Libyan diplomats at the United Nations and several countries broke ranks with Gaddafi's leadership.
Peru suspended diplomatic relations with Libya.
Libya's Interior Minister Abdel Fattah Younes al Abidi defected, Al Jazeera said. It aired video showing Abidi at his desk reading a statement urging the army to support the people and their "legitimate demands".
A government spokesman accused international media of exaggerating the gravity of the situation in the country.
But 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.
Tobruk residents said the city had been in the hands of the people for three days. They said smoke rising above the city was from a munitions depot bombed by troops loyal to one of Gaddafi's sons. There was the occasional explosion.