Libyan leader Muammar Gaddafi has been holding talks with Italian Prime Minister Silvio Berlusconi, the most senior European official to visit his country for two decades.

The two men met for an hour and a half in a tent at the Libyan leader's residence, Bab al-Azizya, and are due to hold a second round of talks before Mr Berlusconi's departure.

Libyans still remember deportations during the Italian occupation

Libya became largely isolated from the West after the United Nations imposed sanctions in 1992 for the alleged role of Libyans in the bombing of an American airliner over Lockerbie, Scotland, in 1998 that left 270 people dead.

Mr Berlusconi's visit comes two days after a day of mourning in Libya to mark the anniversary of a mass deportation of Libyans following the Italian occupation in 1911.

Correspondents say he is expected to agree to return to the Libyans a statue appropriated by Italy during colonial times - known as the Venus of Cyrene.

Berlusconi's visit also coincides with the announcement in Italy by top football club Juventus that Saadi Gaddafi, son of the Libyan leader, has joined the board as representative for the Libyan Arab Foreign Investment Company.

The company holds 7.3% of the share capital in the Turin club.

Colonial past

The UN sanctions were suspended in 1999 when Libya handed over two suspects in the Lockerbie bombing.

One of the suspects was convicted and the other acquitted but the sanctions have not been fully lifted pending a final outcome to the case.

However, Italy and Libya have close ties - economic as well as historical.

Libya is the main supplier of oil to Italy and Rome has been at the fore front of European efforts to resume relations with Gaddafi's government, while Libya was on Washington's "rogue states" list.

At the same time, as a former Italian colony Libya still has unresolved grievances towards Rome.

In February, Libya's official newspapers rejected an offer from Mr Berlusconi to build a hospital to settle damages from the colonial occupation.