Libya's Gaddafi urges Chad, Sudan to make peace

SABRATA, Libya, May 29 (Reuters) - Libyan leader and African Union chairman Muammar Gaddafi appealed to the leaders of Chad and Sudan on Friday to settle an armed standoff along their shared border.

Khartoum says Chad is harbouring rebel fighters from the Sudanese region of Darfur, while Chad has acknowledged it launched air attacks on camps inside Sudan it says are used by rebels opposed to its rule.

Gaddafi, who holds the rotating chairmanship of the African Union, urged a reconciliation between the oil-producing neighbours at a summit of Saharan states he is hosting in Sabrata, 70 km (44 miles) west of Tripoli.

The summit was attended by Sudanese President Omar Hassan al-Bashir and Chadian President Idriss Deby.

"We are keen that the wisdom of the two presidents and their responsibilities towards their people and Africa will make a distinction between the internal problems and the problems which are destroying the relations between the two countries," Gaddafi said in an address to the summit.

He said he would ask representatives from Sudan and Chad, under the supervision of the community of Saharan states, to put forward proposals on resolving the conflict. (Writing by Christian Lowe and Hamid Ould Ahmed; edited by Richard Meares)