TRIPOLI (Reuters) – Muammar Gaddafi is sounding out the possibility of handing over power, a Russian newspaper said on Tuesday, but the Libyan government denied it was in talks about the veteran leader stepping down.

Five months into a conflict that has embroiled NATO and become the bloodiest of the “Arab Spring” uprisings, there has been a flurry of reports about talks on Gaddafi ending his 41 years in power in exchange for security guarantees.

Russia’s respected Kommersant newspaper based its story on a high-level source in Moscow. But the report was denied in Tripoli and Italy expressed skepticism.

“Information about negotiations about Gaddafi stepping down or seeking a safe refuge inside or outside the country is simply untrue,” Libyan government spokesman Moussa Ibrahim told Reuters.

“Gaddafi is not negotiable, this is our position of principle, and the future of Libya will be decided by Libyans. Gaddafi is an historical symbol, and Libyans will die to defend him,” said Ibrahim.

“The talks were about a ceasefire, humanitarian aid, and the start of a dialogue between Libyans, and then the fourth stage which is a transition period over the political change that will be decided by Libyans,” he said.

Some analysts say that Gaddafi is starting to contemplate an exit plan as shortages of cash and fuel, the NATO bombing campaign and rebel military pressure, shorten the odds on him being able to hold on to power.

But Western diplomats caution that it is in Gaddafi’s interests to send out conflicting signals about possible deals, in the hope that it will sow confusion among the rebels and the fragile Western alliance trying to push him out.

“SEEKING GUARANTEES”

A respected Russian newspaper reported that Gaddafi is sounding out the possibility of a way out.

“The colonel (Gaddafi) is sending signals that he is prepared to relinquish power in exchange for security guarantees,” Kommersant newspaper quoted what it called a high-level source in the Russian leadership as saying.

The report came a day after Russia hosted South African President Jacob Zuma — who has tried to broker a peace deal for Libya — and NATO Secretary General Anders Fogh Rasmussen, for talks which focused on Libya.

After his return from Russia, Zuma’s office issued a statement saying he had asked NATO to persuade the rebel National Transitional Council to come to the negotiating table.

“The meeting was very successful, and I am confident that it will contribute significantly to reaching a solution that will bring peace and stability in Libya,” the statement said.

“We requested NATO to assist … (in persuading the National Transitional Council) to remove some of the preconditions that are making it hard or impossible to start with the negotiation process.”

On Monday, the Libyan government had said it held talks in Italy, Norway and Egypt with senior figures in the opposition about finding a peaceful way out of the conflict.

DRIVING A WEDGE

But the Italian government denied any talks had taken place on its soil and expressed skepticism that Gaddafi’s administration was sincere about talks.

“I think it is sort of a propaganda action by Gaddafi’s regime, it is a sign of weakness, they try to legitimise themselves by saying that talks are underway,” said Italian foreign ministry spokesman Maurizio Massari.

“And the aim of Tripoli’s people, Tripoli’s regime is to drive a wedge within the coalition … in a moment of weakness. So I interpret this false information as an act of weakness, a demonstration of weakness of Gaddafi’s regime.”

Speaking to Reuters on Monday, Libyan government spokesman Ibrahim said the Italian government was mistaken. He said he could not reveal the identity of the Italian government member who attended the talks “for diplomatic reasons.”

NATO launched its bombing campaign in March after the United Nations Security Council authorised the use of all necessary means to protect civilians who, inspired by revolutions neighbouring in Tunisia and Egypt, rose up against Gaddafi.

Gaddafi says the rebels are armed criminals and al Qaeda militants. He has called the NATO operation an act of colonial aggression aimed at stealing Libyan oil.

Rebels control the eastern third of Libya, as well as pockets in the West, and NATO says its strikes are gradually eroding Gaddafi’s hold on power. But the rebels have so far failed to make a breakthrough and advance on Tripoli.

Western powers want a swift resolution.

Voters are uneasy about a prolonged conflict in a Muslim country, the halting of Libyan oil exports has helped push up world crude prices to about $112 per barrel, and prolonged chaos in Libya could be exploited by Islamist extremists