* Rebels retreat for 2nd time under heavy fire
* "We have our brothers in Sirte," rebel commander says
* Civilian casualties in ambush
(Adds rebels retreat from Bin Jawad for second time, state tv)
By Mohammed Abbas
RAS LANUF, Libya, March 6 Libyan rebels retreated on Sunday from Bin Jawad which is on the road to Sirte, Muammar Gaddafi's hometown and a prize they are keen to capture, after withering fire from the army.
Hundreds of rebels in pickups and vehicles suddenly tore back at high-speed to the key rebel-held oil town of Ras Lanuf, with many saying they feared an army advance. It was their second retreat from the town in a day.
"Gaddafi's cut us to pieces. He's firing on us with tanks and missiles. I don't know what we're going to do now," Momen Mohammed told Reuters.
Some of the lightly-armed fighters wanted to return to the frontline while others wanted to regroup in Ras Lanuf and resume the attack on Monday morning.
"We made a mistake leaving Bin Jawad. We should have stayed," Ismail Gattani said. "There's been a push by Gaddafi," Mohammed said, adding: "We saw more of Gaddafi's vehicles come forward."
Rebels captured Bin Jawad, 160 km (100 miles) from Sirte, on Saturday but then pulled back, which let the army occupy houses and mount an ambush earlier on Sunday. Rebels were forced into a full retreat to Ras Lanuf port to regroup for another attack.
After they advanced, an artillery duel took place with the rebel frontline firing rockets and mortar bombs at the army which returned fire with similar weapons plus heavy artillery.
"The firing is sustained, there is the thud of shells landing, the whoosh of rockets, puffs of smoke and heavy machine gun fire in the distance," a Reuters correspondent said earlier.
Doctors at Ras Lanuf hospital said two dead and 31 injured had arrived from fighting in Bin Jawad. Witnesses said many dead and wounded could not be reached because of the fighting.
One man said he had seen a civilian building hit by a bomb during the day's fighting.
"The wounded people shouted at us to get their children out. We left the dead," said Khaled Abdul Karim, a rebel fighter, returning from the first retreat.
"I saw civilians shouting and screaming. They had been pushed out of their homes. I saw about 20 to 25 people who looked dead, they were civilians or rebels," said Ashraf Youssef, a rebel fighter.
TRIBES IN SIRTE
Some rebels said the people of Bin Jawad had sided with Gaddafi's forces in the ambush. "There has been treachery. I saw people in civilian clothes firing on us," said Ibrahim Rugrug, a rebel fighter. His comments were echoed by others.
But some in the group criticised Rugrug's accounts, saying: "They are our brothers. They were forced by Gaddafi."
One rebel commander said earlier his forces had pushed west from Bin Jawad and controlled the town of al-Nawfaliyah, 120 km (75 miles) from Sirte, where they would await a call from citizens in Sirte before advancing. There were differing accounts of whether al-Nawfaliyah was still rebel-held. "It's not difficult to take Sirte," Colonel Bashir Abdul Gadir told Reuters. "I think 70 percent of regular people are with us there, but they have asked us not to go into Sirte fearing heavy battles. We're going to wait till they call us to let us know when they are ready."
The colonel, speaking in Ras Lanuf, said there were about 8,000 rebel soldiers between Ras Lanuf and al-Nawfaliyah and Gaddafi's forces were reinforcing the Libyan leader's hometown of Sirte, further west down the coast, from the south.
"We have our brothers in Sirte and they won't accept this situation. They know he is a killer and stole our money and they are going to be with us," Abdul Gadir said, denying government statements that it controls Ras Lanuf.
In the eastern second city of Benghazi, where the uprising began, Colonel Lamine Abdelwahab, a member of the rebel military council for the Benghazi area, said:
"We have received contact from members of the Gaddafda tribe (Gaddafi's tribe) in Sirte who want to negotiate ... There will be no negotiations. They are asking us what we want. We say we don't want Gaddafi (in power)."
Abdelwahab said soldiers belonging to the Ferjan tribes were executed for refusing to fight rebels. "They (the Ferjan tribe in Sirte) are joining the rebellion because of this atrocity. The problem is that they are unarmed. Only the Gaddafda were armed by the regime."
Gaddafi may have more than 20,000 fighters in Sirte, he said, adding that the city houses the Saadi (a son of Gaddafi) battalion which includes four brigades, in addition to his armed tribe members. (For more on unrest in N.Africa and Middle East [ID:nLDE71O2CH]) (Additional reporting by Tom Pfeiffer in Benghazi and Alex Dziadosz in Ras Lanuf; Writing by Peter Millership; editing by Diana Abdallah)