Forces loyal to Libyan leader Moammar Gadhafi fired rockets and tank shells into a Mediterranean oil port Thursday, putting hundreds of rebel fighters on the run on the same day that France gave the rebels diplomatic recognition.

Members of the opposition's Interim Governing Council met directly with French President Nicolas Sarkozy in Paris. Shortly after the meeting, the French government announced that it would exchange representatives with the group, making France the first country to recognize the rebels.

Opposition spokesperson Mustafa Gheriani said the move "breaks the ice" and the group expects that other Western nations will soon follow suit.

"We expect Italy to do it, and we expect England to do it," Gheriani said.

Also Thursday, Germany announced that it had frozen billions in assets belonging to the Libyan Central Bank and other agencies run by the Gadhafi regime.

"The brutal suppression of the Libyan freedom movement can now no longer be financed from funds that are in German banks," German Economy Minister Rainer Bruederle said.

Gadhafi forces push into oil port

On the ground, the rebels took heavy fire in Ras Lanouf, the key oil port where Gadhafi's forces pushed out hundreds of rebel fighters, who fled in cars and pickup trucks mounted with machine guns. They watched for the presence of warplanes as they sped away back to opposition-held territory.

A rebel official told The Associated Press that Gadhafi's forces were firing on the port from the surrounding land and sea.

A rebel governing council spokesperson said the attacks on Ras Lanouf had targeted the main hospital, mosques and civilian areas.

"The regime that has lost legitimacy is practicing a scorched earth policy," Abdel-Hafidh Ghoga said. "We have requested for all steps to be taken to protect the Libyan people. We believe the UN can do that."

Earlier battles

Earlier in the day, the two sides had been fighting on the road that connects the key Mediterranean oil port of Ras Lanouf to the city of Bin Jawwad. The rebels used small tanks and multiple-rocket launcher trucks during the prior fighting.

CTV's South Asia Bureau Chief Janis Mackey Frayer said that fighting is intensifying in this area and it appears that Gadhafi's forces have the upper hand, despite an improved performance on the battlefield by rebel forces.

"The rebel force there seems to be digging in more, maturing somewhat on the battlefield and they are meeting with heavy barrages from pro-Gadhafi forces," Mackey Frayer told CTV's Canada AM by telephone from Benghazi.

But the rebels say they are holding their own against Gadhafi's troops.

"Today, God willing we will take Bin Jawwad," said Youssef Fittori, a major in the opposition force who said defectors from Gadhafi's special forces were fighting alongside the civilian rebels on Thursday.

Gadhafi tightens control near capital

Mackey Frayer said that the Libyan government is also heavily promoting the claim that it has taken back the city of Zawiya, which lies close to the capital city of Tripoli and was, until recently, under the control of the opposition.

Western journalists were taken to a stadium on the outskirts of Zawiya late Wednesday, where they saw Gadhafi loyalists waving flags and celebrating.

The daily events in Libya have been difficult for journalists to confirm as communications services are patchy in cities where the fighting is raging and journalists are restricted in their movements in many areas.

Mackey Frayer said the rebels were restricting access to the frontline between Bin Jawwad and Ras Lanouf, because of the dangers in the area.

"They are trying to look to everyone's safety in a situation that is really unpredictable," Mackey Frayer said.

With files from The Associated Press