BENGHAZI, Libya (Reuters) – With Muammar Gaddafi’s forces fighting rebel troops only two hours’ drive from Benghazi, many shopkeepers and traders in the Libyan rebel capital are keeping their shutters firmly down.

Those who are open for business in the markets and shopping streets of the Mediterranean city say they are ready to close up at a moment’s notice should his troops advance nearer.

Benghazi, Libya’s second city with a population of 670,000 people, has shown some signs of coming back to life since an assault by Gaddafi’s forces was beaten back with the help of French air strikes two Saturdays ago.

Police under the direction of the rebels’ national council are back on the streets, trying to bring some order to the anarchic traffic. At least one truck was out with a crew tackling the Herculean task of picking up rubbish from the litter-strewn streets on Saturday morning.

Food supplies are ample for just now, market traders said, but the general situation is far from normal.

“It’s not safe. I’m only working because I have to,” said Amir Omar, a 25-year-old Sudanese, selling boxes of tea and bags of couscous at a stall in the Al-Fendeq food market. He had only returned to work two days ago.

“It’s quiet, not so good. I’ve just sold a few things all day,” he said. His biggest fear was robbers, or being accused of being one of the African mercenaries who are reported to be serving in Gaddafi’s forces.

Meat, vegetables and other supplies were coming in from other parts of the rebel-held east and over the border from Egypt. Market stalls were piled with tomatoes, cucumbers onions, potatoes and aubergines.

“Prices are high. Tomatoes have doubled, other things not so much. said Rajah Said Ryad, 40. “It’s up and down.”

At Swad el-Abiyat’s butcher shop, big chunks of mutton hung from hooks. He said he had no trouble getting meat as he had his own farm in the eastern countryside. His prices had stayed level, he said.

Aliman Mohamed said people were still buying the robes and embroidered waistcoats he sold at his traditional Arab clothing shop “but not like before.”

“The only day I was shut was the day of the Benghazi attack. But if they come near again, I’ll close. If they pass Ajdabiyah, I’ll run,” he said, referring to a town down the coastal road towards Tripoli.

His sentiments on staying or going were echoed by Abid Al-Ather, 22, who was in his families’ gold shop. It was one of the few establishments open in the normally bustling gold and jewellery market, now largely deserted.

The shop had plenty of gold and silver rings, bracelets and necklaces on display although others that were open had empty shelves, with the wares locked in big safes.

Asked if people were buying gold as a safety measure, he said: “No, for weddings and things. There are people buying to take it to Egypt.”

Gold market traders also expressed concern about robbers or attacks by gunmen loyal to Gaddafi who had stayed in the city.

DINAR AND DOLLARS

Money changers hanging around in the gold market’s square said Libyans and foreign workers planning to leave the country were buying up dollars and the rate was 1.7 dinar to the U.S. currency, against an official rate of 1.2.

Dollars came from foreign journalists and aid workers who had flocked to the city, they said.

In other main commercial areas, from the upmarket Dubai Street to more humble backstreets near the waterfront, shop after shop was shut.

Many Egyptian and African workers had fled in the early weeks of the war and had not come back, people said. A crowd of a few dozen people lined outside an internet café, waiting for their turn at a work station so they could try to contact relatives.

One man, who said he worked on a pump project for a German company, had been waiting more than two hours. He had not spoken to his parents and brothers and sisters in the capital Tripoli for two weeks, he said, and mobile phone networks were not working.

“Sure, I’m worried about them. We have a big bastard in Tripoli,” he said, declining to give his own name because he feared for his relatives’ safety.

Queues have also formed at banks every morning in the past week. The national council’s head of finance, economics and oil, Ali Tahrouni, said on Friday that liquidity was becoming a problem.

People were taking money out but nobody was putting any in. “Our budget is hundreds of millions of dinars and it will not cover basic needs. We need immediate short term loans,” he told reporters.

The council was still negotiating to gain control of 1.4 billion in dinar notes that have been printed in Britain for the Libyan government, he said.