A parliament set up in Libya to rival the elected assembly has suspended UN-sponsored peace talks after blaming the country's internationally recognised government for fresh violence, a spokesman has said.

Last week, the United Nations launched a new round of talks in Geneva aimed at defusing the oil producer's violent struggle between two governments and parliaments vying for control four years after the ousting of Muammar Gaddafi.

The rival assembly, known as the General National Congress (GNC), was set up after an armed group called Libya Dawn seized the capital, Tripoli, last summer. The internationally-backed prime minister, Abdullah al-Thinni, transferred his government to the east.

However, GNC spokesman Omar Hmeidan said on Wednesday that representatives of the Tripoli assembly would not now take part in any UN-sponsored talks, accusing troops allied to the opposing government of storming a central bank branch in the eastern city of Benghazi and other acts of violence.

Both sides, which are allied to armed factions, have been fighting over territory and oil ports and have sought to take charge of the central bank to control vital oil revenues.

Troops loyal to Thinni took over the central bank branch in Benghazi after expelling fighters from the area, a commander told the Reuters news agency.

"The army has controlled the central bank (in Benghazi) for some time, not just today. The central bank is now safe," said Colonel Farraj al-Barasi, an army commander running a military sector in eastern Benghazi.

"We've moved out the technical equipment. The cash is still in the safes," he said, adding that a committee would decide what to do with the money.

Heavy battles

A Reuters reporter saw damage to the central bank building, which is located near Benghazi port - the scene of heavy battles for weeks between Thinni's troops and armed groups such as Ansar al-Sharia.

On Sunday, the GNC had accepted the UN dlialogue so long as the meetings took place in Libya, not Geneva. But Hmeidan made clear that the Tripoli assembly no longer had any intention of taking part in the talks, regardless of where they were held.

"There has been an escalation of fighting in the past two days by troops of the wanted Khalifa Haftar," the GNC said in a statement, referring to an army general allied to Thinni.

"This escalation peaked today with the storming of a sovereign institution, the central bank in Benghazi, by troops of the war criminal Khalifa Haftar."

Mohamed Bazaza, a spokesman for Thinni, dismissed this as "media propaganda war".

Rival factions had attended the talks in Switzerland, but key representatives from the self-declared government and the associated parliament in Tripoli stayed away.

Source: Agencies