A Gulf official says the six-nation Gulf Cooperation Council mediating Yemen's power transfer will drop the US-backed deal and withdraw from mediation if Yemeni President Ali Abdullah Saleh doesn't sign it by the end of the Sunday.

The warning came as a mob of armed Saleh loyalists encircled the United Arab Emirates Embassy, trapping the US, British, Saudi and European ambassadors inside. Saleh was to have signed the deal Sunday.

The pact gives Saleh immunity from prosecution if he steps down within 30 days. He has faced near daily protests for an end to his 32-year rule.