As refugees flooded across Syria's borders and UN officials said they had heard banks in Damascus had run out of cash, Russia's envoy to Paris added to a sense Assad's days were numbered by saying he had accepted he would have to leave power.
Syrian state television flashed a government statement soon afterwards saying the comments were "completely devoid of truth".
Assad has spoken since Wednesday's attack on a meeting of his high command and only appeared on Thursday to appoint a new defence minister to replace one of the assassinated men.
Syrian state television said a funeral ceremony for the defence minister, his deputy – Assad's brother-in-law – and a senior general was being held on Friday in Damascus.
It said later Syria's intelligence chief Hisham Bekhtyar had died on Friday morning of wounds sustained in the same attack.
Clashes continued in Damascus for a sixth day and at least three people were killed when Syrian army helicopters fired rockets at the south-eastern neighbourhood of Saida Zeinab, opposition activists said.
Rebels from elsewhere in Syria have poured into the capital for what they say is the final battle for Damascus.
"The regime is going through its last days," Abdelbasset Seida, the leader of the main Syrian opposition umbrella group, the Syrian National Council, said in Rome, predicting a possible dramatic escalation in violence.
Clashes were fiercest overnight in the sprawling Mezzeh district, where rebels appear to be sustaining attacks on many security compounds located there, residents said.
State television said Syrian forces had cleared the central district of Midan of "mercenaries and terrorists". Opposition activists and rebels sources confirmed on Friday that they had withdrawn after coming under heavy bombardment.
"It is a tactical withdrawal. We are still in Damascus," Abu Omar, a rebel commander, said by telephone.
Residents in central Damascus said shops were closed, roads were empty and only a handful of people were outside.
"We have heard reports that many of the banks have just run out of money," Melissa Fleming, chief spokesperson for the UN' refugee agency UNHCR, told a briefing in Geneva.
Residents reported a lack of government checkpoints in the heart of the city and fewer guards in front of the interior ministry a day after the police headquarters was torched.
Government forces struck the rebel-held Bab al-Hawa border post on the frontier with Turkey overnight and shelled the city of Abu Kamal near the main checkpoint on the border with Iraq which was seized by rebels on Thursday, the Observatory said.
Syrian rebels were still in control of the main Abu Kamal border post on the Euphrates River highway, one of the major trade routes across the Middle East, a senior Iraqi interior ministry official said on Friday.
Other border posts further north, near the Iraqi city of Mosul, appeared to still be under Syrian government army control, Lieutenant-General Ahmed Al-Khafaji said.
Up to 30 000 Syrian refugees may have crossed into Lebanon in the past 48 hours to escape the fighting, the UNHCR said, a huge increase in numbers seeking to flee.
A total of 310 people, including 98 security personnel, were killed on Thursday, the Observatory said, the highest daily death toll so far. The reports could not be confirmed. The Syrian government restricts access by international journalists.
In Damascus, a witness in the central old quarter district of Qanawat said the huge headquarters of the Damascus Province Police was black with smoke and abandoned on Thursday after being torched and looted in a rebel attack.
"Three patrol cars came to the site and were hit by roadside bombs," activist Abu Rateb said by telephone. "I saw three bodies in one car. Others said dozens of security men and shabbiha [pro-Assad militia] lay dead or wounded along Khaled bin al-Walid street, before ambulances took them away."
A resident who toured much of Damascus late on Thursday said the interior ministry at the main Marjeh Square had a fraction of its usual contingent of guards still in place.
Shelling could be heard on the south-western suburb of Mouadamiyeh from hills overlooking the city where the Fourth Division, commanded by Assad's brother Maher, is based, he said.
Killed in battle
Syrian television showed the bodies of about 20 men in T-shirts and jeans with weapons lying at their sides, sprawled across a road in the capital's Qaboun district. It described them as members of the "so-called Free Army" killed in battle.
The next few days will be critical in determining whether Assad's government can recover from the devastating blow of the bombing on Wednesday of Assad's inner circle which destroyed its aura of invulnerability.
The Russian ambassador to France said he believed Assad had signalled readiness to step down when he accepted a recent international declaration which foresaw a transition towards a more democratic Syria. "That means he has accepted to leave, but in an orderly way," Alexandre Orlov told French RFI radio.
The remarks differed sharply from repeated Russian statements that Assad will not leave power altogether of his own accord, but Moscow has also argued that Assad is ready to comply with demands he delegate authority by naming a representative to conduct a political dialogue with the opposition.
Although Russia has criticised Western powers for pushing for Assad to step down, the comments drew a hasty rebuff from Damascus in a sign of the intense nervousness there.
Diplomatic efforts – rapidly overtaken by events on the ground – collapsed in disarray on Thursday when Russia and China vetoed a UN Security Council resolution that would have imposed sanctions unless Syrian authorities halted violence. Washington said the Council had "failed utterly".
'Arrogance and inflexibility'
China said Western diplomats were to blame for trying to ram through a draft that did not put enough pressure on opposition groups, China's official Xinhua news agency said on Friday.
In a commentary, Xinhua said the draft was not balanced and Western diplomats "displayed arrogance and inflexibility" in negotiations, effectively killing it.
Diplomacy has been largely ineffective throughout the crisis, with Western countries condemning Assad but showing no stomach for the sort of robust intervention that saw Nato bombers help blast Libya's Muammar Gaddafi from power last year.
Thursday's failed UN Security Council resolution, which would have extended a small, unarmed UN monitoring mission, was the third that has been vetoed by Russia and China.
The US ambassador to the United Nations, Susan Rice, said the Security Council had "failed utterly", and Washington would look elsewhere for ways "to bring pressure to bear on the Assad regime and to deliver assistance to those in need".
Russia criticised her comments. "I think that is a very alarming signal to all of us," Foreign Ministry spokesperson Alexander Lukashevich said in Moscow.
To replace the vetoed text, Britain proposed a four-paragraph resolution that would at least extend the expiring mandate of the monitors for 30 days. Russia's ambassador said he would ask Moscow to consider it. – Reuters