By Cynthia Johnston and Frederik Richter
MANAMA (Reuters) - Protesters in Bahrain took back a symbolic square on Saturday and Libyan security forces shot more people demonstrating against longtime leader Muammar Gaddafi as uprisings sweeping the Arab world challenged its rulers.
The anti-government demonstrators in Bahrain swarmed into Pearl Square in Manama, putting riot police to flight in a striking victory for their cause and confidently setting up camp for a protracted stay.
In Libya's second city Benghazi, security forces killed at least three more people but withdrew to a fortified compound, a witness said, after the worst unrest in Gaddafi's four decades in power.
Human Rights Watch said 84 people have been killed in Libya over the past three days in a fierce security crackdown mounted in response to anti-government protests that sought to emulate uprisings in neighbouring Egypt and Tunisia.
Unrest has spread from those two countries, whose leaders were toppled, to Bahrain, Libya, Yemen and Djibouti as people in country after country shed their fear and take to the streets demanding democratic change and economic opportunity.
Anti-government protests met varying degrees of force in Yemen, Algiers and Djibouti, while an Egyptian court approved a new party in a landmark ruling. Saudi authorities detained activists trying to set up the kingdom's first political party.
In Bahrain, a key U.S. ally and home to the U.S. Fifth Fleet, thousands of protesters celebrated as they poured into Pearl Square, after riot police hurriedly pulled out.
"We don't fear death any more, let the army come and kill us to show the world what kind of savages they are," said Umm Mohammed, a teacher wearing a black abaya cloak.
Bahrain's government said it had opened a dialogue with opposition groups demanding reform.
"A Bahrain process of dialogue has begun between the crown prince and political groups," the information affairs authority said in a message on Twitter. It gave no further details.
The crown prince, charged by King Hamad on Friday with opening a dialogue, called for a national day of mourning for the six people killed in this week's protests, and appealed for calm.
He had earlier announced that all troops had been ordered off the streets -- meeting one of the conditions for talks set out by an ex-lawmaker of the main Shi'ite opposition bloc Wefaq.
The Sunni Muslim Al-Khalifa dynasty rules Bahrain, but the Shi'ite majority has long complained about what it sees as discrimination in access to state jobs, housing and healthcare.
The United States and top oil producer Saudi Arabia see Bahrain as a Sunni bulwark against neighbouring Shi'ite regional power Iran.
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In Libya, security forces in Benghazi fired in the air to disperse a crowd mourning the dozens of protesters killed in the worst unrest of Gaddafi's four decades in power.
There was no sign of a nationwide revolt, with the violence concentrated around Benghazi, 1,000 km (625 miles) east of the capital, where support for Gaddafi traditionally has been weaker than in the rest of the country.
A Benghazi resident said security forces which killed dozens of protesters over the past 72 hours were confined to a compound, which he called the Command Centre, from which snipers were firing at protesters.
"They shot dead three protesters from that building today," the witness, who did not want to be identified, told Reuters.
"Right now, the only military presence in Benghazi is confined to the Command Centre Complex in the city. The rest of the city is liberated," he said.
The Benghazi-based newspaper Quryna said 24 people were killed in the city on Friday, shot when security forces fired to stop protesters attacking the police headquarters and a military building where weapons were stored.
British Foreign Secretary William Hague urged Libya to stop using force against protesters, calling it "unacceptable and horrifying," and asked Middle Eastern governments to respond to the "legitimate aspirations" of their people.
The spreading unrest helped drive Brent crude oil prices higher this week before other factors caused them to slip on Friday. It also was a factor in gold prices posting their best weekly performance since December.
Analysts say that Gaddafi, unlike the Egyptian leadership, has oil cash to smooth over social problems, and is respected in much of the country, which remains calm.
In Egypt, a court approved the Wasat Party (Centre Party), the first new party to be recognised since President Hosni Mubarak was overthrown this month, and an official said there would soon be a limited cabinet reshuffle.
In Saudi Arabia, on the other hand, several Islamists and opposition activists who tried to launch a political party in a rare challenge to authority, have been detained, rights activists said.
"At a time when people throughout the Arab world are out on the street seeking greater freedom, the Saudi secret police seem determined to nip any similar demands in the bud," said Christoph Wilcke, senior Middle East researcher at Human Rights Watch.
Saudi Arabia is an absolute monarchy that does not tolerate dissent and has no elected parliament and no political parties.
In Yemen, one protester was killed and seven were hurt in clashes with supporters of President Ali Abdullah Saleh in Sanaa.
In Algiers, police in riot gear crammed some 500 protesters into the courtyard of a residential block before they could reach May 1 Square in the city centre to start a banned march.
Al Jazeera television, whose coverage of the unrest is widely watched in the Arab world, said it was investigating reports of disrupted reception across the Middle East, a day after it said its signal had been jammed on several frequencies.
The uprisings sweeping through the region have also reached the tiny Horn of Africa state of Djibouti, where three leading opposition politicians were detained on Saturday in a move to quash anti-government protests.
Djibouti, a former French colony between Eritrea and Somalia, hosts France's largest military base in Africa and a major U.S. base. Its port is used by foreign navies patrolling busy shipping lanes off the coast of Somalia to fight piracy. Unemployment runs at about 60 percent.
(Additional reporting by Hamid Ould Ahmed in Algiers, William Maclean in London and Saleh Al-Shaibany in Muscat; Writing by Tim Pearce, editing by Michael Roddy)
