The NATO military alliance said Wednesday it was monitoring two Iranian warships that have entered the Mediterranean Sea, a presence that has unnerved Israel.

"We follow events in the region and we follow these two Iranian warships with as much interest as we do any other warships in the region," said NATO spokeswoman Oana Lungescu.

Europe moved Wednesday to isolate Libya's Moammar Gadhafi, with France calling for sanctions and a freeze in financial relations while Italy accused the veteran strongman of perpetrating a bloodbath.

With hundreds killed in a week of raging protests, Europe has struggled with how to exercise leverage against Gadhafi, in power for more than 41 years and whose country provides Europe with a large slice of its energy needs.

A fighter pilot disobeyed orders on Wednesday to bomb the opposition stronghold of Benghazi and ditched his plane after he and his co-pilot ejected, a Libyan newspaper reported on its website.

The Russian-made Sukhoi 22 crashed near Ajdabiya, 160 kilometers west of the city which has fallen to anti-regime protesters, a military source said, quoted in Quryna newspaper.

Iran's president said Wednesday he is certain the wave of unrest in the Middle East will spread to Europe and North America, bringing an end to governments he accused of oppressing and humiliating people.

Mahmoud Ahmadinejad, whose own country resorted to violence to disperse an opposition rally earlier this month, also condemned Libya's use of force against demonstrators, calling it "grotesque."

King Abdullah Returns to Riyadh, Boosts Social Benefits

Saudi King Abdullah arrived in his homeland Wednesday after three months abroad, boosting social benefits for his people as he returned to a Middle East rocked by anti-regime uprisings.

Bahraini authorities have released 23 Shiite activists who were being held on charges of terrorism after a pardon by King Hamad, an opposition MP told Agence France Presse on Wednesday.

"The 23 have been released," said MP Jassem Hussein, a member of the Islamic National Accord Association, which controls the largest bloc in the 40-strong parliament.

The Arab League on Tuesday barred Libya from its meetings until Tripoli responds to the demands of protesters, threatening to suspend its membership after clashes that have killed hundreds.

The League decided to "stop the government of Libya from participating in meetings of the Arab League and all bodies affiliated to it, until the Libyan authorities respond to demands, guaranteeing the security and stability of its people," it said in a statement.

Libyan leader Moammar Gadhafi vowed to fight on to his "last drop of blood" and roared at his supporters to take to the streets against protesters demanding his ouster, shouting and pounding his fist in a furious speech Tuesday after two nights of a bloody crackdown in the capital trying to crush the uprising that has fragmented his regime.

It was the second time Gadhafi has appeared during the week of upheaval across his country. Swathed in brown robes and a turban, he spoke on state TV from behind a podium in the entrance of his bombed-out Tripoli residence hit by U.S. airstrikes in the 1980s and left unrepaired as a monument of defiance.

Israel put its navy on high alert and said it would respond immediately to any "provocation" as two Iranian warships sailed through the Suez Canal into the Mediterranean on Tuesday.

The Iranian vessels entered the southeastern Mediterranean after going up the canal for the first time since the 1979 Islamic Revolution, reportedly en route for Syria, in a move taking them past Israeli territorial waters.

Tens of thousands of supporters of Bahrain's Shiite-led opposition poured into a Manama square on Tuesday calling for the government's downfall in the largest rally in more than a week of protests.

Streets of the capital were clogged as protesters marched from Manama's Bahrain Mall to Pearl Square, the focal point of anti-regime demonstrations that have gripped the Gulf state since February 14.