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Rodrigo Abd, Associated Press
Demonstrators against Moammar Gadhafi gather in front of a U.S. flag late at night downtown Benghazi, Libya, Wednesday, May 18, 2011.

TRIPOLI, Libya — Hundreds of Moammar Gadhafi's loyalists staged a show of support in the capital early Thursday, claiming the rebel insurgency was nearing an end, as the Libyan leader's forces intensified a campaign to take strategic heights in a western mountain range.

In the main square in Tripoli, crowds of teenagers, young men and security officers turned out overnight for a government-sponsored rally, spraying gunfire into the air, setting off fireworks and waving green Libyan flags.

The gathering appeared to have been organized in an attempt to reassure Libyans that the regime was standing strong three months into an uprising that has left most of the east in rebel hands, halted the country's oil exports and drawn in a punishing NATO air campaign against Gadhafi's forces. Gadhafi's regime has also been hit by a wave of defections.

Late on Wednesday, Libya's deputy foreign minister, Khaled Kaim, denied rumors that Gadhafi's wife and daughter had fled to neighboring Tunisia. "They are in Tripoli; they are safe," he said. He also denied that Oil Minister Shukri Ghanem defected, saying he was in Vienna on business.

Ghanem, who was also head of Libya's National Oil Co., crossed into neighboring Tunisia by road on Monday and defected, according to a Tunisian security official and Abdel Moneim al-Houni, a former Libyan Arab League representative who was among the first wave of Libyan diplomats to defect.

Prominent members of Gadhafi's government who have abandoned the regime include the foreign minister, justice minister, a former U.N. General Assembly president and a number of other diplomats.

Much of the intensified fighting this week in the western mountain range centered around the town of Yafrin. Residents and rebel fighters said Wednesday that Gadhafi forces were using Grad missiles and rockets. Residents trapped in their homes were cut off from food and medical supplies, they said.

Government forces targeted a road that many people have used to flee the fighting, forcing a temporary closure of the border with Tunisia. It reopened Wednesday.

In nearby Zintan, rebels repelled an advance by Gadhafi's forces, killing eight and taking one prisoner, a local activist said.

Although Gadhafi's forces control most of western Libya, rebels have linked up with minority Berbers to keep his forces out of the highest points of the Nafusa mountains, denying them a military advantage.

BelJassem, a fighter from a Berber village near Yafrin, which is 75 miles (120 kilometers) southwest of Tripoli, said Gadhafi forces were shelling the town repeatedly. "We dig trenches and hide in there at night," said BelJassem, who gave only his first name for fear of reprisals.

On the eastern front, rebels engaged in an hours-long firefight with Gadhafi loyalists, said Dr. Suleiman Refadi, who works at a hospital in the city of Ajdabiya.

He told The Associated Press that the rebels killed 14 of Gadhafi's fighters and captured 30 near the oil town of Brega, which is about 50 miles (80 kilometers) southwest of Ajdabiya. Refadi said he treated five wounded rebels.

Refadi said the rebels were helped by NATO airstrikes, which destroyed eight vehicles carrying heavy artillery.

There was no way to independently confirm the report because journalists are not allowed beyond a checkpoint on the outskirts of Ajdabiya.

At the overnight demonstration in Tripoli, regime supporters said they were celebrating because they heard on state TV that Gadhafi loyalists were holding similar rallies in the rebel stronghold of Benghazi, though there was no evidence of such a demonstration in the eastern city.

Benghazi has been firmly under rebel control since early in the uprising, which began on Feb. 15.

Young men in cars honked their horns hung out of the windows, cheering and waving Libyan flags and those of the Tripoli football team al-Ahli.

Others set off fireworks and fired assault rifles into the air.

"We are celebrating our unity of citizens in east and west," said Raid Mansour, 35, carrying his young daughter on his shoulders. "Now we all think the same: We want freedom and for Moammar Gadhafi to be victorious," Mansour said.

Ben Bouazza reported from Tunis, Tunisia. Associated Press writers Maggie Michael and Ben Hubbard in Cairo and Michelle Faul in Benghazi, Libya, contributed to this report.